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Note 4.1: Employee Provisions

2020

2019

$’000

$’000

Leave

12,373

11,732

Total employee provisions

12,373

11,732

Accounting Policy
Employee Benefits
Liabilities for ‘short-term employee benefits’ and termination benefits due within 12 months of the end of the reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Leave
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave, as all sick leave is non-vesting and the average sick leave taken in the future years by employees of the NLA is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the NLA’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the work of an actuary as at 30 June 2017. NLA management has reviewed the assessment for long service leave provision at 30 June 2020 and consider the value is reliable. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. The next actuarial assessment will be performed in 2020-21.

Separation and Redundancy
Provision is made for separation and redundancy benefit payments. The NLA recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation
Employees of the NLA are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme. The liability for the defined benefit schemes is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance’s administered schedules and notes.

The NLA makes employer contributions to the employee's defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. Employer contributions to superannuation funds nominated by the employee are made at the same rate as those of the PSSap. The NLA accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June represents outstanding contributions.

Employee Benefits
The NLA relies on a methodology developed by the Australian Government Actuary to estimate the present value of a provision for annual and long service leave. The methodology for estimating the present value of the long service leave uses probability factors for NLA employees reaching unconditional entitlement and a discount factor which provides for both interest effects and salary increases, both in terms of promotional salary advancement and salary inflation.