Employee Benefits PDF

Employee Benefits Employee Benefits all form of consideration given by an entity in exchange for service rendered by employees or for termination of employment IAS 19 (1) Short-term employee (2) Post-employment (3) Other long-term Termination Benefits benefits...

Employee Benefits Employee Benefits all form of consideration given by an entity in exchange for service rendered by employees or for termination of employment IAS 19 (1) Short-term employee (2) Post-employment (3) Other long-term Termination Benefits benefits Benefits employee benefits; and - Other than termination, short-term benefits and termination benefits - other than termination - Other than termination Includes: - Benefits given in benefits; and short-term i) Long service leave/ exchange for the Expected to be settled benefits that are payable Sabbatical termination of wholly before 12 after completion ii) Jubilee/Long service employees’ employment months after the end of of employment. benefits due to entity’ decision to annual reporting. Includes: iii) Long term stability terminate Includes: i) Pension benefits employee before the i) Wages/Salaries ii) Lump sum payment on normal retirement ii) SSS Contribution retirement. date and employee iii) Bonuses payable iii) Post-Employment life accepted it with iv) Non-monetary insurance and exchange of termination benefits medical care. benefits SHORT-TERM EMPLOYEE BENEFITS Recognition and Measurement Recognized expense during the reporting period when the employee rendered service, unless the cost of such employee benefits are other assets Other assets - Property, plant, and equipment and Inventories At the end of the reporting period – unpaid amount to be recognized liability at undiscounted amount ACCRUAL OF WAGES AND SALARIES Compensation Expense / Equivalent Account XXX Accrued Liability XXX SHORT-TERM COMPENSATED ABSENCES Annual leave and paid sick leave Absences are expected to occur within 12 months Accumulating or non- accumulating. Accumulating Short-Term Employee Benefits Accumulating Compensated Absences Carried forward and can be used in future period if the current period entitlement is not used in full Vesting – employee entitled to receive the date he leaves an entity. Example: unused leave is accumulated and paid at retirement Non-vesting – not entitled to cash payment for unused entitlement expected cost recognized as an expense when employee renders service that increases their entitlement to future compensated absences Accumulating Short-Term Employee Benefits Measurement Measure the additional amount that an entity expects to pay as a result of unused entitlement Liability at year end: “best estimate” Vesting- if unclaimed, shall be paid upon leaving, and increases the amount of obligation Measured at year-end, and remeasured at the rate expected to apply when claimed Non-vesting- if the employee is not entitled to payment for unused benefits. Measured at year end during available period. Measured obligation through LIFO LIFO- estimated number of days to be availed – charged to expense; and only the excess of annual entitlement shall be liability. Illustration Non-Accumulating Short-Term Employee Benefits Non-accumulating Compensated Absences not carried forward and do not require accrual at year-end. Entity recognizes cost when the absences occur Expensed unless another standard requires the same to be recognized as cost of another asset when the absences occur. Post-employment BENEFITS other than termination and short-term benefits. payable after the completion of employment. Benefits plan (for 1 to more employees) 1. Informal 2. Formal Includes Retirement benefits- Pension Post- employment benefits- life insurance and medical care Retirement Benefits Plan / Pension Plans (a) Contributory Plans and Non-Contributory Plans (b) Funded Plans and Unfunded Plans; and (c) Defined Contribution Plans and Defined Benefit Plans  Contributory Plans and Non- Funded Plans and Defined Contribution Plans and Contributory Plans Unfunded Plans Defined Benefit Plans Contributory Plan- Both employer Funded Plans – a trustee is existing Most significant classification; and employees are required to and designated to administers the depends on economic substance make contributions to the fund resources As derived from principle terms assets.  Employer has no obligation afterand conditions.  Usually salary deduction all Defined Contribution Plan- Factors:  SSS and GSIS Plans – make  Funding agencies – SSS and GSIS age, length of service, periodic contribution. employer’s profit and Trustee- independent entity compensation level. Non-contributory Plan- employee manages fund and > Obligation of employer is limited is not required to make pays employee after separated to to agreement contribution for the retirement employer. > benefits based on the the benefits. amount accumulated in the Fund.  Only the employer shoulders Unfunded Plans – employer retains To get: TOTAL CONTRIBUTION PAID the cost of employees’ right to manage the retirement BY THE ENTITY retirement benefits. benefits fund, and has > In the case of contributory plan- an obligation to settle benefits amount contributed by the > No trustee for the Fund. employee and amount earned by the fund. > Both actuarial and investment risk fall on the EMPLOYEE