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We calculate your employee benefit provision under IAS 19

Companies that prepare their financial statements under IFRS measure employee benefits under IAS 19; for defined benefit plans, “actuarial assumptions are required to measure the obligation and the expense” (paragraph 55). In Slovakia, the Labour Code itself grants a severance payment on retirement (§ 76a). In the Czech Republic, the Labour Code permits retirement and jubilee bonuses but does not require them (§ 224(2)).

We offer

If you are interested, our actuaries, certified by the National Bank of Slovakia, will provide:

  • Calculation of the provision
  • Consultation on setting the actuarial assumptions
  • Preparation of the necessary documentation
  • Answers to any questions you may have

Employee benefits for which a provision is made

Typical examples of employee benefits for which a provision is made are:

  • Financial benefit on retirement (old-age pension)
  • Financial benefit on the award of a disability pension
  • Financial benefit on reaching a life jubilee (milestone birthday)
  • Financial benefit on a work jubilee (service anniversary)

Slovakia: severance on retirement (odchodné) is statutory

The Slovak Labour Code (Act No. 311/2001 Coll., version in force from 1 September 2026) grants a severance payment on retirement, odchodné (§ 76a):

  • On the first termination of employment after becoming entitled to an old-age pension, or to an invalidity pension with a decline in the ability to work of more than 70 %, the employee is entitled to odchodné of at least their average monthly earnings, provided they apply for the pension before the employment ends or within ten working days after it ends (§ 76a(1)).
  • The same minimum applies on termination of employment if the employee was granted an early old-age pension on an application filed before the employment ended or within ten days after it ended (§ 76a(2)).
  • Odchodné is due from one employer only (§ 76a(3)). The employer does not have to pay it if the employment ended under § 68(1), immediate termination by the employer (§ 76a(4)).

The Slovak Labour Code grants no entitlement to jubilee bonuses. Wage conditions are agreed with the trade union in a collective agreement or with the employee in the employment contract (§ 119(2)). A payment made for work on the occasion of a work or life anniversary counts as wages unless it is paid from after-tax profit or from the social fund (§ 118(3)).

Guides in Slovak: Rezerva na odchodné (odchodné, a step-by-step calculation and accounting) and Jubilejné odmeny (jubilee bonuses, including the public sector).

Czech Republic: bonuses are optional under the Labour Code

The Czech Labour Code (Act No. 262/2006 Coll., version in force from 29 August 2026) only permits these bonuses: the employer “may” grant a bonus “in particular on a life or work jubilee and on the first termination of employment after the award of an invalidity pension for third-degree invalidity or after becoming entitled to an old-age pension” (§ 224(2)(a), our translation). An entitlement can be created, for example, by a collective agreement or by internal rules: a collective agreement may regulate employees’ rights in employment relationships (§ 23(1)), and an employer may use internal rules to set employees’ rights more favourably than the Labour Code does, and internal rules are binding on the employer (§ 305(1) and (3)).

How often company-level collective agreements include them, according to the annual survey of wage and working conditions agreed in collective agreements (IPP 2025, business-sector results, 1,239 agreements):

BonusShare of agreements
on the first termination of employment after becoming entitled to an old-age pension or after the award of a third-degree invalidity pension60.0 %
on a work anniversary58.8 %
on reaching 50 years of age50.3 %

The average retirement bonus rises with length of service in the organisation, from CZK 6,206 (up to 5 years) to CZK 20,973 (over 40 years).

Guide in Czech: Odměna při odchodu do důchodu a jubilejní odměny (all IPP 2025 amounts by length of service).

Who reports under IFRS

Slovakia

  • Must prepare individual financial statements under IFRS (§ 17a(1) of Act No. 431/2002 Coll. on Accounting): banks, management companies, insurers other than health insurers, reinsurers, the Slovak Insurers’ Bureau, pension fund management companies, supplementary pension companies, the Stock Exchange and entities established by a special act, and branches of foreign banks, management companies, insurers and reinsurers.
  • May choose IFRS (§ 17a(2)): a commercial company that, for at least two consecutive accounting periods, meets at least two of these conditions: total assets over EUR 170 million, net turnover over EUR 170 million, average number of employees over 2,000. Further cases, for example an entity whose securities issued in the period were admitted to trading on a regulated market of an EU member state, are listed in § 17a(3).

Czech Republic

  • Must: a commercial company that is an issuer of investment securities admitted to trading on a European regulated market (§ 19a(1) of Act No. 563/1991 Coll. on Accounting); a consolidating entity that is such an issuer prepares its consolidated financial statements under IFRS (§ 23a(1)).
  • May: an entity that expects to be included in consolidated financial statements prepared under IFRS, or a consolidating entity that will prepare them under IFRS (§ 19a(7) and (8)); the decision is approved by the entity’s highest body.
  • Proposed: the government bill for a new Accounting Act (parliamentary print 63) makes IFRS mandatory for the individual financial statements of banks, credit unions, insurers, pension companies, investment funds, securities dealers and the other entities listed in its § 168(1), with a proposed effective date of 1 January 2028 (§ 286). As of 19 October 2026 it is in its second reading in the Chamber of Deputies. Guide in Czech: Nový zákon o účetnictví.

Consolidated financial statements under IFRS are prepared “using uniform accounting policies for like transactions and other events in similar circumstances” (IFRS 10, paragraph 19); where a group member uses other accounting policies, “appropriate adjustments are made to that group member’s financial statements in preparing the consolidated financial statements” (paragraph B87).

How IAS 19 treats these benefits

BenefitIAS 19 categoryRemeasurements
lump sum on retirement or disability (odchodné, Czech retirement bonus)post-employment benefit: “payable after the completion of employment” (paragraph 8)other comprehensive income (paragraph 120(c))
jubilee bonusother long-term employee benefit: “jubilee or other long-service benefits” (paragraph 153(b))profit or loss (paragraphs 154 and 156)
  • Both are measured with the projected unit credit method (paragraph 67, which paragraph 155 applies to other long-term employee benefits).
  • Discount rate (paragraph 83): “The rate used to discount post-employment benefit obligations (both funded and unfunded) shall be determined by reference to market yields at the end of the reporting period on high quality corporate bonds. For currencies for which there is no deep market in such high quality corporate bonds, the market yields (at the end of the reporting period) on government bonds denominated in that currency shall be used.”
  • The standard “encourages, but does not require, an entity to involve a qualified actuary in the measurement of all material post-employment benefit obligations” (paragraph 59).

References

  • Logo ALAS ALAS SLOVAKIA, s.r.o.
  • Logo Národná banka Slovenska Národná banka Slovenska
  • Logo Branson Branson Ultrasonics, a.s.
  • Logo CEMMAC CEMMAC a.s.
  • Logo Continental Logo Matador Continental Matador Rubber, s.r.o.

Contact

If you have any questions, please contact us.

E-mail:
info@ias19.sk

Address:
Augustus Consulting, s.r.o.
Exnárova 8
Bratislava 821 03

Sources