Study unit 12: Employee benefits
Definitions
Employee includes all categories: full-time, part-time, permanent, casual, temporary,
management, directors and even their spouses/dependents where the benefits are paid to them
Employee benefits All forms of consideration given by an entity in exchange for:
Services rendered by employees Scope of IAS 19:
The termination of employment -Applicable to all employee benefits except for those
within the scope of IFRS 2
-Also applicable to directors and management
Di erent types of employee benefits
Short-term benefits EB that are expected to be settled wholly before 12 months after the
end of the period in which the employees rendered services other than
termination benefits
Other long-term benefits All EB’s other than short-term, post-employment and termination
benefits
Post employment benefits EB’s that are payable after the completion of employment other than
short-term and termination benefits
Termination benefits EB’s that are payable as a result of either the entity’s decision to
terminate employment before normal retirement date or the
employee’s decision to accept an o er of benefits in exchange for
termination of employment
SHORT TERM EMPLOYEE BENEFITS
EB’s that are expected to be settled wholly before 12 months after the end of the period in which the
employees rendered services other than termination benefits
4 categories:
Wages, salaries, social security contributions (medical aid)
Paid leave (annual leave)
Profit sharing and/or bonusses
Non-monetary benefits (car, medical care, housing)
Recognition and measurement:
Short-term employee Undiscounted amount Expense when service is
benefits expected to be paid rendered
Recognised when employee renders the service (accrual concept)
Dt An expense
Cr Bank (if it is paid)/liability (if amount due has not yet been paid)
Example:
Dt Employee benefit expense (P/L)
Cr PAYE payable (SFP)
Cr UIF payable (SFP)
Cr Provident fund payable (SFP)
Cr SDL payable (SFP)
Cr Salary payable (SFP)
Definitions
Employee includes all categories: full-time, part-time, permanent, casual, temporary,
management, directors and even their spouses/dependents where the benefits are paid to them
Employee benefits All forms of consideration given by an entity in exchange for:
Services rendered by employees Scope of IAS 19:
The termination of employment -Applicable to all employee benefits except for those
within the scope of IFRS 2
-Also applicable to directors and management
Di erent types of employee benefits
Short-term benefits EB that are expected to be settled wholly before 12 months after the
end of the period in which the employees rendered services other than
termination benefits
Other long-term benefits All EB’s other than short-term, post-employment and termination
benefits
Post employment benefits EB’s that are payable after the completion of employment other than
short-term and termination benefits
Termination benefits EB’s that are payable as a result of either the entity’s decision to
terminate employment before normal retirement date or the
employee’s decision to accept an o er of benefits in exchange for
termination of employment
SHORT TERM EMPLOYEE BENEFITS
EB’s that are expected to be settled wholly before 12 months after the end of the period in which the
employees rendered services other than termination benefits
4 categories:
Wages, salaries, social security contributions (medical aid)
Paid leave (annual leave)
Profit sharing and/or bonusses
Non-monetary benefits (car, medical care, housing)
Recognition and measurement:
Short-term employee Undiscounted amount Expense when service is
benefits expected to be paid rendered
Recognised when employee renders the service (accrual concept)
Dt An expense
Cr Bank (if it is paid)/liability (if amount due has not yet been paid)
Example:
Dt Employee benefit expense (P/L)
Cr PAYE payable (SFP)
Cr UIF payable (SFP)
Cr Provident fund payable (SFP)
Cr SDL payable (SFP)
Cr Salary payable (SFP)
