to download Telecom Italia Annual Report 2011 - Company Reporting

Note 20 – Employee benefits
Employee benefits decreased 281 million euros compared to December 31, 2010 and are composed of
the following:
(millions of euros)
12/31/2009 Change in the
scope of
consolidation
Argentina BU
Provision
charges/
present
value
Decrease 12/31/2010
Provision for employee severance
indemnities
(a) 1,051 40 (105) 986
Provision for pension plans 25 27 8 (1) 59
Provision for termination benefit incentives 146 228 (99) 275
Total other provisions for employee
benefits
(b) 171 27 236 (100) 334
Total (a+b) 1,222 27 276 (205) 1,320
of which:
non-current portion 1,075 1,129
current portion (*) 147 191
(*) The current portion refers only to Other provisions for employee benefits.
12/31/2010 Provision
charges/
(millions of euros)
present
value
Decrease
Exchange
differences and
reclassifications
12/31/2011
Provision for employee severance
indemnities
(a) 986 (75) (82)
Provision for pension plans 59 (3) (1) (34) 21
Provision for termination benefit
incentives
Total other provisions for employee
benefits
275 19 (105)
(b) 334 16 (106)
Total (a+b) 1,320 (59) (188) (34) 1,039
of which:
non-current portion 1,129 850
current portion (*) 191 189
(*) The current portion refers only to Other provisions for employee benefits.
Provision for employee severance indemnities refers only to the Italian companies of the Group and
decreased in total by 157 million euros; the reduction of 82 million euros refers to indemnities paid to
employees who terminated employment or for advances. The negative change of 75 million euros in the
“Provision charges/present value” column is the sum of the following:
• +42 million euros for provision charges for interest accruing during the year;
• -117 million euros for the total effect on employee severance indemnities deriving from: higher
discount rate – taken as the return on 10-year government securities, change in inflation rate
considered as well as the new law on pensions, Law 214 of December 22, 2011, which extends the
estimated period in which a person works.
According to national law, the amount to which each employee is entitled depends on the period of
service and must be paid when the employee leaves the company. The amount of severance indemnity
due upon termination of employment is calculated on the basis of the period of employment and the
taxable compensation of each employee. This liability is adjusted annually based on the official cost-ofliving
index and legally-prescribed interest earned. The liability is not associated with any vesting
condition or period or any funding obligation; hence, there are no assets servicing the provision.
Under the regulations introduced by Legislative Decree 252/2005 and Law 296/2006 (the State
Budget Law 2007), for companies with at least 50 employees, the severance indemnities accruing from
-
-
(34)
829
189
210
Telecom Italia Group
Consolidated Financial Statements
Note 20 – Employee benefits 237