AS-15 – Employee Benefits :
This Standard prescribes accounting and disclosure for all employee benefits, except employee share-based payments.
The Standard specifies the following four categories of employee benefits:
(i) Short-term employee benefits, such as wages, salaries and social security contributions (e.g., contribution to an insurance company by an employer to pay for medical care of its employees), paid annual leave, profit- sharing and bonuses (if payable within twelve months of the end of the period) and non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees. The Standard requires that an enterprise should recognise the undiscounted amount of short-term employee benefits when an employee has rendered service in exchange for those benefits.
(ii) Post-employment benefits, such as gratuity, pension, other retirement benefits, post-employment life insurance and post-employment medical care. These are classified as either defined contribution plans or defined benefit plans depending on the economic substance of the plan. Under defined contribution plans, the enterprise’s obligation is limited to the amount that it agrees to contribute to the fund and in consequence, actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be insufficient to meet expected benefits) fall on the employee. All other post-employment benefit plans are defined benefit plans. Accounting for defined benefit plans is complex because actuarial assumptions are required to measure the obligation and the expense and there is a possibility of actuarial gains and losses. Moreover, the obligations are measured on a discount basis since they may be settled in many years after the employees render the related service. Defined benefit plans may be unfunded, or they may be wholly or partly funded by contributions by an enterprise.
(iii) Other long-term employee benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation. The Standard requires a simplified method of accounting for other long-term employee benefits than for postemployment benefits by requiring that past service cost should be recognised immediately
(iv) Termination benefits. Termination benefits are employee benefits payable as a result of either: an enterprise’s decision to terminate an employee’s employment before the normal retirement date; or an employee’s decision to accept voluntary redundancy in exchange for those benefits (voluntary retirement).