6.3.1 Employee benefit obligations

Short-term employee benefits are benefits (other than termination benefits) which fall due wholly within twelve months after the end of the annual reporting period in which the employees render the related service. Short-term employee benefits require no actuarial assumptions. The Group recognises the anticipated undiscounted amount of short-term benefits to be paid out. Expenses on benefits paid during employment are charged to profit or loss of the current reporting period.

Short-term employee benefits paid by the Group include:

• Salaries, wages and social security contributions,
• Short-term compensated absences (including paid holiday leaves, sick leaves, maternity leaves),
• Profit-sharing and bonuses payable within 12 months after the end of the period in which the employees acquired the related entitlements,
• Non-cash benefits for current employees.

Short-term employee benefits are recognised in the period in which the Group entity receives relevant services provided by the employee and, in the case of profit-sharing and bonus payments – when the Group entity has a present legal or constructive obligation to make such payments as a result of past events and when the obligation can be measured reliably.

The Group recognises expected employee benefits expense in the form of short-term compensated absences:

• for cumulative compensated absences (where the employees performed work that increases their entitlement to future compensated absences) – if they have not been fully used in the reporting period,
• for non-cumulative compensated absences – at the time of absence.

These are employee benefits (other than termination benefits) which are payable after termination of service. They consist primarily of retirement benefits. The Group operates various post-employment benefit plans, including defined contribution plans or defined benefit plans, depending on the economic substance of such plan as derived from their principal terms and conditions.

Post-employment benefits include retirement severance payments and benefits from the Company Social Benefits Fund.

Other long-term employee benefits are all benefits which are payable after 12 months from the reporting date. They include:

• Long-term compensated absences,
• Length-of-service awards and other long-service benefits,
• Long-term disability benefits,
• Other long-term employee benefits.

Post-employment benefit obligations in the form of defined benefit plans (retirement severance payments) and other long-term employee benefits (e.g. length-of-service awards, long-term disability pensions, benefits under the Company Social Benefits Fund) are determined using the projected unit credit method of actuarial valuation carried out at the end of the reporting period.

Actuarial gains and losses related to defined post-employment benefits are presented in other comprehensive income, whereas gains and losses related to other benefits paid during employment are charged to profit or loss of the current reporting period.

This obligation arises as a result of the entity’s decision to terminate an employee’s employment relationship before reaching retirement age or the employee’s decision to accept the proposed benefits in exchange for termination of employment.

Changes in obligations under retirement severance payments and length-of-service awards were as follows:

In the reporting period, the technical rate applied to calculate the discounted value of future retirement severance obligations was 0%, and resulted from a 3.6% annual return on long-term Treasury bonds and a 3.6% forecast annual salary growth (at the end of 2020 the applied technical rate was -1.4%, and resulted from the rates of 1.2% and 2.7%, respectively).