IFRS 7 and Employee Benefits not related to a Benefit Plan

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Pacioli99
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Joined: 01 Nov 2021, 06:20

IFRS 7 and Employee Benefits not related to a Benefit Plan

Post by Pacioli99 »

Greetings,

IFRS 7 specifically excludes "employers' rights and obligations arising from employee benefit plans to which IAS 19 Employee Benefits applies".

Does this mean that IFRS 7 applies to employee benefits that meet the definition of financial liabilities that are not related to an employee benefit plan, for example salary accruals? I'm assuming that if those arise out of employee contracts they would meet the definition of financial liabilities. I'm not sure about vacation accruals because even if they can be compensated, the intention is not to settle in cash generally. Statutory payments payable would also be excluded.

IAS 19 doesn't define "employee benefit plan" as far as I can see, it just has definitions for specific types of plans. Is the general usage of the term "employee benefit plan" applicable (unless it is defined in another standard) or should that term just be ignored since it is not defined and we just exempt all employer's rights and obligations to which IAS 19 applies?
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Marek Muc
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Re: IFRS 7 and Employee Benefits not related to a Benefit Plan

Post by Marek Muc »

to me this scope exclusion in IFRS 7 (and IAS 32/IFRS 9) relates to all employee benefits in the scope of IAS 19

IFRIC dealt with a similar question in 2005:
The IFRIC considered whether a liability for long service leave falls within IAS 19 or whether it is a financial liability within the scope of IAS 32. The IFRIC noted that IAS 19 indicates that employee benefit plans include a wide range of formal and informal arrangements. It is therefore clear that the exclusion of employee benefit plans from IAS 32 includes all employee benefits covered by IAS 19. The IFRIC decided that, since the Standard is clear, it would not expect diversity in practice and would not take this item onto its agenda.
https://www.ifrs.org/content/dam/ifrs/n ... update.pdf
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