Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

Chapter 10Employee Benefits

1. Introduction
2. Recognition of Short-Term Employee Benefits
3. Defined Contribution Pension Plans
4. Defined Benefit Pension Plans
5. Deferred Tax Issues on Pensions
6. Disclosure Requirements

Introduction

All companies provide employee benefits of some description to their employees, whether it be wages or salaries, holiday entitlement, company vehicles, medical care, provision of housing or a pension plan towards retirement. Regardless of the types of benefits the entity provides to its employees, the entity is required to account for them in some way within the financial statements and Section 28 Employee Benefits recognises that some employee benefits are fairly simple to account for, whilst other forms of benefits can be very complicated and often require specialist assistance to provide the necessary information for the accounting input and related disclosures to be made within the financial statements.

Section 28 refers to employee benefits as being all forms of consideration that are given to employees by an entity in exchange for the related service. The term ‘employees’ in the context of Section 28 also relates to directors and the management of an entity – in other words all individuals that are in the employment of the entity regardless of seniority. However, Section 28 does not apply to share-based payment arrangements that an entity may have in place as these are dealt with in Section 26 Share-based Payment.

The scope of Section 28, therefore, is ...