Objective

The objective of this Standard is to prescribe the accounting and disclosure for employee benefits. The Standard requires an entity to recognise:

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(a) a liability when an employee has provided service in exchange for employee benefits to be paid in the future; and

 

(b) an expense when the entity consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.

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Scope

1. This Standard applies to all employee benefits, except for share-based payment transactions, which are covered by FRS 102 Section 26 Share-based Payment.

 

2. Employee benefits covered by this Standard will include:

 

a) Short-term employee benefits (other than termination benefits) that are wholly due within twelve months after the end of the reporting period in which the employees render the related service.

 

b) Post-employment benefits, which are employee benefits (other than termination benefits) that are payable after the completion of employment.

 

c) Other long-term employee benefits, which are employee benefits (other than post-employment benefits and termination benefits) that are not wholly due within twelve months after the end of the period in which the employees render the related service.’

 

d) Termination benefits, which are employee benefits payable as a result of either:

    i) An entity’s decision to terminate an employee’s employment before the normal retirement date, or

    ii) An employee’s decision to accept voluntary redundancy in exchange for those benefits.

 

3. Example of employee benefits include:

 

a) Short-term employee benefits:

    i) Wages, salaries and social security contributions;

    ii) Short-term compensated absences (such as paid annual leave and paid sick leave) when the absences are expected to occur within twelve months after the end of the period in which the employees render the related employee service;

    iii) Profit-sharing and bonuses payable within twelve months after the end of the period in which the employees render the related service;

    iv) Non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees.

 

b) Post-employment benefits:

    i) Retirement benefits (pensions)

    ii) Other post-employment benefits (post-employment life insurance and post-employment medical care).

 

c) Other long-term employee benefits:

    i) Long-term compensated absences such as long-service or sabbatical leave;

    ii) Long-service benefits;

    iii) Long-term disability benefits;

    iv) Profit-sharing and bonuses payable twelve months or more after the end of the period in which the employees render the related service;

    v) Deferred compensation paid twelve months or more after the end of the period in which it is earned.