International Financial Reporting Standards_guide.pdf

CHAPTER 25
Employee Benefits (IAS 19)
25.1 OBJECTIVE
IAS 19 requires entities to identify and recognize all the benefits that they are obliged to provide
to employees, regardless of the form or timing of the benefits. While some employee
benefits such as salaries are paid to employees as they render the services to the entity, other
benefits such as long service awards and retirement benefits are only paid to employees after
the services have been rendered to the entity. IAS 19 provides guidance on how to recognize
and measure all types of benefits. The goal is that the entity recognizes the related expenses
as the employee renders the service rather than when they receive payment for the services
rendered.
25.2 SCOPE OF THE STANDARD
IAS 19 applies to all employee benefits, including benefits provided under formal arrangements,
legislative requirements, and informal practices. The standard does not cover equity
compensation benefits, which are within the scope of IFRS 2.
The standard identifies five types of employee benefits:
1. short-term employee benefits (for example, bonuses, wages, and social security);
2. postemployment benefits (for example, pensions and other retirement benefits);
3. long-term employee benefits (for example, long-service leave and, if not due within
12 months, profit sharing, bonuses, and deferred compensation);
4. termination benefits; and
5. equity compensation benefits (for example, employee share options per IFRS 2).
Employee benefits include benefits that are payable to dependants of employees. Furthermore,
“employees” includes all employees employed on any basis—full time, part time, permanent,
temporary, or casual.
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