Payment in kind

[shorty]

Is it acceptable practice (legal) to "pay" a part time employee by providing board and meals only? As there is no actual salary, there is no accrual of superannuation, annual leave, sick leave and so on.

Thanks in advance
shorty

[Job Media]

Hmm, well it was acceptable practice in the 17th and 18th century English workhouses. However, although it may not be acceptable practice today, it may not necessarily be illegal to reward someone this way. I guess it depends on what the board and meals are worth.

I'm no expert, but the PIK (payment in kind) has a value and if the PIK is deemed to be part of the ordinary time earnings base (which surely it must), then superannuation would probably be payable at 9% of the value of the PIK. You could ask the ATO for clarification.

Providing the employees are not casual employees, then they would probably be entitled to annual leave and sick leave.

If the employer claimed that the accommodation and meals were not PIK, then they would probably attract Fringe Benefits Tax and the employer would probably be breaking the law because they are not paying the minimum wage.

I'm no expert in these matters and others on this forum are likely to be able to offer better advice.

[shorty]

Thanks Job Media.

I will expand on the situation: These people have 7 day board, (in very average accommodation), 3 meals a day, work 16 hours a week, PLUS do 2 overnight supervisions. They do not receive any wages whatsoever. Just their board and meals.

I have been through the Superannuation Guarantee and believe that the employer is getting away with not contributing to Super by saying these are Fringe Benefits. I dont see how you can be giving someone "Fringe Benefits" when you aren't actually paying them anything.

Ive been to the ATO site and believe, as you say, that the tax office would see this payment in kind as having a value which is both taxable and would mean that Super and other benefits should have been paid.

[Job Media]

Shorty, it's sounds like you are coming to the same conclusions as us - that this employer is probably in breach of several laws, which ever way you look at it!

[Chipmunk]

Hi Shorty,

Without knowing the specifics of the employment situation or how the employees were engaged by the employer it’s hard to provide specific advice. I would say no you cannot pay someone in kind for work performed.

Basically the Fair Work Act 2009 has carried over the transitional minimum wage until it makes its first order later this year. This transitional min wage applies to all employees under the national system (excluding juniors) not covered by an award guaranteeing them payment of at least that amount for each hour worked. It may also be possible that the employer is covered by a modern award that applies to that employee for the type of work they are doing.

To me this practice sounds extremely dodgy.