ESG Report of the
ENEA Capital Group for 2020

32. Employee benefit liabilities

Accounting rules

Short-term employee benefits

The Group classifies the following as short-term employee benefits: monthly salary, annual bonus, right to discounts on electricity, short-term paid absences (remuneration for unused vacation time), together with social security contributions, Energy Professionals' Day awards and liabilities concerning the Voluntary Redundancy Program.

The liability concerning (accumulated) short-term paid absences (pay for leave) is recognised even if the paid absences do not entitle to a cash equivalent. The Group determines the expected cost of accumulated paid absences as an additional amount that it expects to pay as a result of not exercising this entitlement as at the balance sheet date.

Other liabilities are measured in the amount due to be paid.

Long-term employee benefits

Pursuant to an agreement between staff representatives and the Group’s representatives, the Group’s employees are entitled to certain benefits other than remuneration for work, i.e.: These benefits are financed entirely by the Group. Actuarial methods are used to estimate these liabilities.

Defined benefit plans

In accordance with workplace remuneration regulations, the Group’s employees have the right to the following post-employment benefits:

  • retirement/disability severance pay – paid on a one-off basis upon retirement,
  • post-mortem payment – if an employee dies in the course of work or while on disability leave after work as a result of a disease, the family is entitled to a post-mortem payment from the employer,
  • cash equivalent resulting from the right to discounted electricity prices,
  • benefits from the Workplace Social Benefits Fund.

The provisions below constitute a defined benefit plan after the employment period.

The present value of provisions for post-employment benefits is calculated at each balance sheet date by an independent actuary, using actuarial methods. The provisions are calculated for every employee individually. The liabilities accrued are equal to discounted payments that will be made in the future, taking into account employee turnover, and they apply to a period until the balance sheet date. Demographic information and information on employee turnover are based on historic data.

Actuarial gains and losses on the measurement of post-employment benefit liabilities are recognised entirely in other comprehensive income.

Longevity bonus

Other long-term employee benefits at the Group include longevity bonuses. The amount of these bonuses depends on seniority and the employee’s remuneration. Actuarial methods are used to estimate these liabilities. Actuarial gains and losses are fully recognised in present-period profit or loss.

Defined contribution plans

1. Social insurance contributions

The social insurance system is based on a state programme under which the Group is obligated to pay contributions for employees' social insurance when they are due. The Group is not required, either legally or customarily, to make future social insurance contributions. The Group recognises the cost of present-period contributions in present-period profit or loss as employee benefit cost.

2. Employee Pension Program

In accordance with an appendix to the Collective Labour Agreement, the Group runs an Employee Pension Program in the form of group insurance for employees with a capital fund in accordance with rules specified in the Act and negotiated with the trade unions.

The Employee Pension Program is available to the Group’s employees after a year’s employment regardless of the type of work contract.

The Group covers the cost of contributions to the Employee Pension Program from present-period profit or loss as employee benefit cost.

Significant judgements and estimates

A valuation was adopted for employee benefit provisions based on the balance of liabilities at the end of the reporting period concerning expected future payments of benefits, which was calculated by an independent actuary using actuarial methods. This estimate is affected by the discount rate and long-term growth in wages.

Estimates of the following employee benefit liabilities are done by an actuary:

  • longevity bonus payments,
  • pension/disability benefit payments,
  • post-mortem payments,
  • right to discounts in purchasing electricity,
  • contribution to the Workplace Social Benefits Fund

For calculation purposes, basic data was used for each Group employee individually, as at the end of the reporting period, (taking the employee’s gender into account), from the following areas:

  • age
  • employment at the Group,
  • overall employment
  • remuneration, constituting the basis for the size of longevity bonus and retirement severance payment.

Actuarial assumptions used in calculating these estimates are presented below.

Employee benefit liabilities

As at
31 December 2020 31 December 2019
Remuneration and other liabilities 402 472 387 727
Provision for Voluntary Leave Program 1 745
Retirement and disability severance payments 236 122 215 354
Right to rebates in purchasing energy after retirement 356 098 301 704
Contribution to Company Social Benefits Fund for retired employees 118 231 103 756
Post-mortem payments 26 556 25 086
Longevity bonus 453 902 416 273
Total employee benefit liabilities 1 595 126 1 449 900
Long-term 1 097 643 983 818
Short-term 497 483 466 082

 

Changes in the 12 months to 31 December 2020

Retirement  everance payments Right to rebates in purchasing energy after retirement Contribution to Company Social Benefits Fund for retired employees Post-mortem payments Longevity payments Total
As at 1 January 2020 215 354 301 704 103 756 25 086 416 273 1 062 173
Costs recognised in profit or loss, including: 17 125 14 153 6 496 2 206 78 406 118 386
cost of present employment 12 981 7 862 4 312 1 712 31 917 58 784
cost of future employment 91 213 304
cost of interest 4 053 6 291 2 184 494 8 141 21 163
net actuarial gain arising from change in financial assumptions 13 764 13 764
net actuarial gain arising from adjustment of demographic assumptions 760 760
net actuarial gain arising from ex-post adjustment of assumptions 23 611 23 611
Costs recognised in other comprehensive income, including: 18 124 49 302 10 236 (4) 77 658
net actuarial gain arising from change in financial assumptions 8 003 54 474 10 476 934 73 887
net actuarial gains/(losses) arising from adjustment of demographic assumptions 820 1 344 746 (628) 2 282
net actuarial gains/(losses) arising from ex-post adjustment of assumptions 9 301 (6 516) (986) (310) 1 489
Reduced liabilities concerning payout of benefits (negative value) (14 481) (9 061) (2 257) (732) (40 777) (67 308)
Total changes 20 768 54 394 14 475 1 470 37 629 128 736
As at 31 December 2020 236 122 356 098 118 231 26 556 453 902 1 190 909
Long-term 202 963 345 052 115 690 24 446 409 492 1 097 643
Short-term 33 159 11 046 2 541 2 110 44 410 93 266

 

Changes in the 12 months to 31 December 2019

Retirement  everance payments Right to rebates in purchasing energy after retirement Contribution to Company Social Benefits Fund for retired employees Post-mortem payments Longevity payments Total
As at 1 January 2019 185 906 250 254 73 752 21 448 364 377 895 737
Costs recognised in profit or loss, including: 15 440 26 895 10 461 1 994 92 921 147 711
cost of present employment 10 287 5 276 2 259 1 363 26 384 45 569
cost of future employment 113 13 789 5 884 3 866 20 655
cost of interest 5 040 7 830 2 318 628 10 498 26 314
net actuarial gain arising from change in financial assumptions 38 381 38 381
net actuarial gain arising from adjustment of demographic assumptions (1 352) (1 352)
net actuarial gain arising from ex-post adjustment of assumptions 18 144 18 144
Costs recognised in other comprehensive income, including: 28 051 33 483 21 271 2 476 85 281
net actuarial gain arising from change in financial assumptions 23 647 48 338 22 122 2 624 96 731
net actuarial gains/(losses) arising from adjustment of demographic assumptions (698) (1 501) (1 056) (20) (3 275)
net actuarial gains/(losses) arising from ex-post adjustment of assumptions 5 102 (13 354) 205 (128) (8 175)
Reduced liabilities concerning payout of benefits (negative value) (14 043) (8 928) (1 728) (832) (41 025) (66 556)
Total changes 29 448 51 450 30 004 3 638 51 896 166 436
As at 31 December 2019 215 354 301 704 103 756 25 086 416 273 1 062 173
Long-term 188 386 292 569 101 386 22 984 378 493 983 818
Short-term 26 968 9 135 2 370 2 102 37 780 78 355

 

Actuarial assumptions

Assumptions 31 December 2020 31 December 2019
Estimated long-term annual wage growth 1.8% in 2021, 2.45% in 2022, 2.40% in 2023, 2.5% in subsequent years 2.7%
Estimated growth in value of contribution to Company Social Benefits Fund 14.8% in 2022, 4.4% in 2023, 4.6% in 2024, 5.2% in 2025, 5.4% in 2026, 5.5% in 2027-2030, 5.2% in the forecast’s remaining years. 13.95% in 2021, 5.7% in 2022-2026, 5.6% in 2027-2029, 5.2% in the forecast’s remaining years.
Discount rate 1.5% 2.15%
Value of cash equivalent for subsidised energy purchases PLN 1 515.73 PLN 1 330.25
Growth in value of cash equivalent for subsidised electricity purchases 1.5 in 2021, 8.1% in 2022, 4.0% in 2023, 4.1% in 2024-2027, 2.5% in subsequent years in 2020: 23.18%, 2021: -4.0%, 2022-2026: 5.0%, in subsequent years: 2.5%
Average monthly remuneration (for the purposes of calculating Company Social Benefit Fund liabilities) PLN 4 134.02 PLN 4 134.02

 

Sensitivity analysis for defined benefit plans

Defined benefit plans: Impact of changes in actuarial assumptions on level of defined benefit plan liabilities
+ 1 pp – 1 pp
Discount rate (97 016) 124 327
Expected remuneration growth rate 48 631 (39 868)
Average growth in the value of cash equivalent for subsidised electricity purchases 65 870 (51 880)

 

Maturity of defined benefit plan liabilities

As at
Weighted average period of defined benefit program liabilities (in years) 31 December 2020 31 December 2019
Retirement and disability severance payments 15,0 14,7
Post-mortem payments 12,0 11,4
Right to rebates in purchasing energy after retirement 17,2 16,5
Contribution to Company Social Benefits Fund for retired employees 19,8 19,0

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