Home' Nufarm Annual Report : Nufarm Annual Report Contents 3. Significant accounting policies (continued)
(j) Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which services are
rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
(ii) Defined benefit plans
The group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount
of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair
value of any assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the group, the recognised asset is limited to the present value
of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
To calculate the present value economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan asset
(excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognised immediately in OCI. The
group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net-defined
benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a
result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans
are recognised in profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service
or the gain or loss on curtailment is recognised immediately in profit or loss. The group recognises gains and losses on the
settlement of a defined benefit plan when the settlement occurs.
(iii) Other long term employee benefits
The group’s net obligation in respect of long term employee benefits, other than defined benefit plans, is the amount of
future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs;
that benefit is discounted to determine its present value and the fair value of any related assets is deducted. The discount
rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the group’s
obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised
in profit or loss in the period in which they arise.
(iv) Termination benefits
Termination benefits are recognised as an expense when the group is demonstrably committed, without a realistic possibility
of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide
termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary
redundancies are recognised as an expense if the group has made an offer encouraging voluntary redundancy, it is probable
that the offer will be accepted and the number of acceptances can be estimated reliably. If benefits are payable more than
12 months after the reporting period, then they are discounted to their present value.
(v) Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service
A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans if the group
has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
NOTES TO THE FINANCIAL STATEMENTS continued
66 | NUFARM LIMITED ANNUAL REPORT 2014
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