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NÚR I-52 Employee Benefits: what the interpretation means for your financial statements

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In brief

On 13 June 2025, the Czech National Accounting Council (Národní účetní rada, NÚR) approved interpretation I-52 Employee Benefits. Under it, employee benefits are recognised in profit or loss, and the expense arises in the period in which the employee performed the work that gives rise to the entitlement. For long-term benefits such as jubilee bonuses, the liability is therefore recognised gradually over the whole period of employment, not only when the bonus is paid. The interpretation is not legally binding; it expresses the professional opinion of the NÚR.

Approved
13 June 2025
Recognition
in profit or loss
Expense
in the period the work is performed
Binding force
not legally binding

On this page

This is an English translation of the Czech guide NÚR I-52 Zaměstnanecké požitky. Quotations from Czech sources are our translation.

What NÚR I-52 is and how binding it is

Interpretation I-52 Employee Benefits was approved by the National Accounting Council on 13 June 2025. It was prepared by representatives of the Union of Accountants of the Czech Republic and the Chamber of Tax Advisers of the Czech Republic. It is based on the obligation to keep accounts so that the financial statements give a true and fair view of the subject of accounting and of the financial position of the accounting entity (§ 7(1) of Act No. 563/1991 Coll. on Accounting).

The interpretation itself states: “This interpretation is not a legally binding opinion; it only expresses the professional opinion of the National Accounting Council…” According to its introduction, the procedure it describes is guidance for cases where its application has a material effect on the financial statements and the benefits of the information exceed the costs of obtaining it.

What problem it addresses

According to point 1, Czech practice accounts for employee benefits in different ways: either in profit or loss, with a direct effect on the result, or through the balance sheet against equity (for example against funds or retained earnings). Financial statements are therefore not comparable in terms of profit or loss, the structure of equity or the amount of expenses. The aim of I-52 is to unify the presentation and to answer three questions (point 2):

  1. What is an employee benefit?
  2. Should the provision of benefits be recognised in profit or loss, or through the balance sheet?
  3. When should a liability to an employee be recognised for short-term and when for long-term benefits?

What an employee benefit is (points 3 and 4)

Employee benefits are all payments that the employer provides to employees for their work, in cash and in kind, short-term and long-term (point 3). For the purposes of the interpretation, a benefit is one “to which the employee is entitled under a legal regulation, a collective agreement, an internal rule or a binding promise of the employer, and which the employer can no longer decide of its own will not to provide” (point 4). The interpretation does not include payments and promises derived from the value of an ownership interest (shares or business interests) among employee benefits.

Retirement bonuses and jubilee bonuses agreed in a collective agreement or in an internal rule meet this definition. The Labour Code itself creates no entitlement: under § 224(2), the employer “may” grant such bonuses.

In profit or loss, not through equity (points 5 to 7)

  • Employees’ work is a consumption of external resources, so employee benefits are recognised in profit or loss (point 5).
  • Recognition is based on recognising a liability to the employee. “The expense arises in the period in which the employee performed the work for which they become entitled to employee benefits.” (point 6)
  • Funds created from profit for employee benefits are only information about the extent of employees’ entitlements, and their use cannot replace the recognition of personnel expenses (point 7).

When to recognise the liability

Type of benefitWhat I-52 saysPoints
Short-termdue by the end of the following accounting period; the liability and the expense are recognised in the period in which the employee worked10 to 13
Long-termnot due by the end of the following accounting period, e.g. long-term paid leave, jubilees, completion of a certain number of years of work; recognised gradually over the whole period of work14 and 15
Post-employmente.g. social services for former employees or a continuing contribution to pension and life insurance; the liability is built up during employment in the amount of the relevant part of a qualified estimate16 and 17
On early termination by the employere.g. severance pay above the statutory amount; the liability and the expense are recognised at the time of the agreement or of a sufficiently specific notice by the employer18

For long-term benefits, the interpretation expressly states: “This type of entitlement is recognised gradually over the whole period of the employee’s work, with the amount of the company’s liability developing gradually.” (point 15)

A retirement bonus under a collective agreement is not expressly mentioned among the examples in I-52. If its amount depends on the years worked, the employee builds up the entitlement through work, and under points 6 and 15 the expense is spread over the periods in which the work is performed, as for jubilee bonuses. How often and in what amounts these bonuses are agreed is shown in the guide Czech Republic: retirement and jubilee bonuses.

How to measure the liability (point 8)

“All entitlements of employees and the liabilities for them must be measurable, and this measurement must take into account all known facts. In the measurement, it is appropriate to use mathematical and statistical methods as well and to consider using valuation methods based on discounted cash flows.” (point 8)

In settling the comments on the draft, the NÚR stated that the amount recognised is a qualified estimate that takes into account the expected percentage take-up of the specific benefits. For jubilee bonuses and retirement bonuses, in practice this means taking into account mainly:

  • how many employees will actually stay with the organisation until the jubilee or retirement (turnover, mortality),
  • when the bonus will be paid and what its value will be at the balance sheet date (discounting),
  • what part of the entitlement the employee has already earned.

Liability, estimated item or provision? (point 9)

“Depending on the nature of the liability to employees, the accounting entity decides how they will be presented, that is, as an ordinary liability, an estimated item or a provision.” (point 9)

Point 9 was added in response to a comment asking about the choice between the balance sheet items C.II.8.3. Liabilities to employees, C.II.8.6. Estimated payables and B.4. Other provisions. According to the NÚR’s position, it also matters for the choice whether the arising liability can be identified with a specific employee or not.

Relation to IAS 19

Accounting entities that prepare their financial statements under IFRS measure the same benefits under IAS 19 using the projected unit credit method: the retirement bonus as a post-employment benefit and jubilee bonuses as other long-term employee benefits. Who uses IFRS is explained in the guide IAS 19 in the Czech Republic.

Sources

We calculate your employee benefit provision under IAS 19.

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