Definition: Wages and salaries (Index)
It is the objective of the wages and salaries index to approximate the development of the wage and salaries bill.
Wages and salaries are defined as the total remuneration, in cash or in kind, payable to all persons counted on the payroll (including home workers), in return for work done during the accounting period, regardless of whether it is paid on the basis of working time, output or piecework and whether it is paid regularly.
Wages and salaries include the values of any social contributions, income taxes, etc. payable by the employee even if they are actually withheld by the employer and paid directly to social insurance schemes, tax authorities, etc. on behalf of the employee. Wages and salaries do not include social contributions payable by the employer.
Wages and salaries include: all gratuities, bonuses, ex gratia payments, 13th month payments, severance payments, lodging, transport, cost-of-living, and family allowances, tips, commission, attendance fees, etc. received by employees, as well as taxes, social security contributions and other amounts payable by employees and withheld at source by the employer.
Payments for agency workers are not included in wages and salaries.
According to this definition, the items included are:
- all basic wages and salaries payable at regular intervals,
- enhanced rates of pay for overtime, nightshift, weekend work, etc.,
- any allowances, gratuities or bonuses paid by the employer, such as:
--- cost of living, housing, local or expatriation allowances,
--- food allowances,
--- allowances for travelling to and from work,
--- holiday bonuses, 13th month pay,
--- allowances actually paid for annual holidays not taken,
--- output, production or productivity bonuses,
--- extra allowances for extreme working conditions like dust, dirt, temperature, smoke, danger, etc.,
--- exceptional payments to employees who leave the enterprise, if those payments are not linked to a collective agreement,
--- allowances for improvement proposals and patent fees paid to the person employed,
--- directors’ and employees’ fees,
--- family allowances paid by the employer under a collective agreement,
- value of bonus shares distributed free to the employees,
- payments made by employers to employees under saving schemes or other schemes,
- taxes, contributions and other sums payable by employees and deducted by employers,
- any payment in kind.
The items excluded are:
- statutory social contributions payable by the employer,
- collectively agreed, contractual and voluntary social contributions payable by the employer,
- imputed social contributions (social benefits paid directly by the employer),
- allowances paid to employees for the purchase of tools, equipment and special clothing needed for their work or that part of their wages and salaries which under their contracts of employment are required to devote such purchases,
- taxes paid by the employer on the total wages and salaries paid,
- reimbursement of employees for travelling, removal, separation, hotel and entertaining expenses, telephone fees etc. incurred in the course of their duties,
- expenditure for vocational training (training costs), excluding apprentices wages and salaries,
- wages and salaries which the employer continues to pay in the event of illness, occupational accident, maternity leave or short-time working,
- other labour cost expenditure payable by the employer:
--- recruitment costs,
--- social expenditure such as the reimbursement of current expenditure on the transport of employees to and from work, whether this is carried out by the enterprises’ own means of transport or by third parties on behalf of the enterprise, payments to trade union funds,
- stock options (1).
For the evaluation of payments in kind the following rule applies: payments in kind produced by the employer should be valued at producer prices; payments in kind bought by the employer should be valued at market prices.
(1) Stock options have been excluded mainly for practical reasons linked to the difficulties of a harmonised definition and data collection although it is often considered as a compensation for work linked to the overall performance of the company
European Union, Commission Regulation (EC) No 1503/2006 of 28 September 2006 implementing and amending Council Regulation (EC) No 1165/98 concerning short-term statistics as regards definitions of variables, list of variables and frequency of data compilation