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Employee benefits provisions

The changes to a remote working environment at some councils mean the employee benefit provisions will not follow a traditional pattern.  In some cases, the value of the provision may drop quite significantly as staff are being encouraged to utilise the leave at this time. In other cases, employees may cancel leave due to the current restrictions and leave balances may increase.

Where working hours are reduced (or perhaps increased), the calculation of employee benefit provisions will need to be carefully checked to ensure that the correct provision is being included.

If any form of ‘special leave’ is being offered by a council to employees, the terms and conditions around this leave needs to be considered.  Council needs to determine whether a provision is to be recorded at the reporting date or whether the leave is more akin to ‘sick leave’ (which is recognised only when taken).

Defined benefit superannuation liabilities

Where councils are party to a defined benefit plan and council’s specific liability is recognised  in the financial statements, then the current economic environment may have a significant impact on the value of assets in those funds, and therefore a substantial increase in defined benefits superannuation liability is likely.

Last updated: Monday, Nov 30, 2020