6.3.1. Employee benefit obligations
Accounting policies
Short-term benefitsShort-term employee benefits are benefits (other than termination benefits) which fall due wholly within twelve months after the end of the annual reporting period in which the employees render the related service. Short-term employee benefits require no actuarial assumptions. The Group recognises the anticipated undiscounted amount of short-term benefits to be paid out. Expenses on benefits paid during employment are charged to profit or loss of the current reporting period.
Short-term employee benefits paid by the Group include:
- Salaries, wages and social security contributions,
- Short-term compensated absences,
- Profit-sharing and bonuses payable within 12 months after the end of the period in which the employees acquired the related entitlements,
- Non-cash benefits for current employees.
Short-term employee benefits, including payments towards defined contribution plans, are recognised in the periods in which the employee provided the services to a Group entity, and in the case of profit-sharing and bonus payments – when the following conditions are met:
- A Group entity has a legal or constructive obligation to make such payments as a result of past events, and
- A reliable estimate of the expected cost can be made.
The Group recognises expected short-term employee benefits expense related to compensated absences in the case of accumulated compensated absences (that is absences to which the entitlement is transferred to the future periods and can be used in the future if the absences were not fully used in the current period).
Long-term benefits
Long-term employee benefits are all benefits which are payable after 12 months from the reporting date. They include:
- Post-employment benefits,
- Other long-term employee benefits.
Post-employment benefits include termination benefits, retirement severance payments, and benefits from the Company Social Benefits Fund.
Provision for long-term employee benefits is determined using the projected unit credit method, with the actuarial valuation made as at the end of the reporting period.
Actuarial gains and losses related to defined post-employment benefits are presented in other comprehensive income, whereas gains and losses related to other benefits paid during employment are charged to profit or loss of the current reporting period.
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| Employee benefit obligations | 2016 | 2015 | ||
|---|---|---|---|---|
| Non-current | Current | Non-current | Current | |
| Liabilities under length-of-service awards | 473 | 45 | 439 | 42 |
| Liabilities under severance payments | 178 | 4 | 113 | 2 |
| Wages and salaries payable | – | 72 | – | 56 |
| Amounts payable for unused holiday entitlements | – | 54 | – | 47 |
| Termination benefits | – | 20 | – | 36 |
| Other employee benefit obligations | 51 | 139 | 13 | 169 |
| Total | 702 | 334 | 565 | 352 |
Changes in obligations under retirement severance payments and length-of-service awards were as follows:
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| Length-of-service awards | Retirement severance payments | |||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| Obligations at beginning of period | 481 | 491 | 115 | 100 |
| Interest expense | 17 | 5 | 4 | 1 |
| Current service cost | 24 | 23 | 7 | 4 |
| Past service cost | – | (25) | – | (10) |
| Benefits paid | (51) | (53) | (16) | (15) |
| Actuarial gain/(loss) − changes in financial assumptions | 9 | (14) | 4 | (6) |
| Actuarial gain/(loss) − changes in demographic assumptions | 87 | 55 | 38 | 41 |
| Gain/(loss) due to curtailments or settlements | (63) | (1) | 24 | – |
| Changes in the Group | 14 | – | 6 | – |
| Obligations at end of period | 518 | 481 | 182 | 115 |
The technical rate applied to calculate the discounted value of future retirement severance obligations was 1.1%, and resulted from a 3.6% annual return on long-term Treasury bonds and a 2.5% forecast annual salary growth (at the end of 2015 the applied technical rate was 1.4%, and resulted from the rates of 2.9% and 1.5%, respectively).
