Financial Reporting · Ind AS 19 Employee Benefits

Other Long-term Employee Benefits under Ind AS 19

Updated 5 October 2026 · Fact-checked

Other long-term employee benefits are benefits, other than post-employment and termination benefits, not due wholly within twelve months after the period in which the service is rendered. Measure the net liability like a defined benefit plan, but recognise all remeasurements in profit or loss, not in OCI. Present it as service cost, net interest and remeasurements.

Understand Other Long-term Employee Benefits

Ind AS 19 sorts employee benefits into four groups: short-term, post-employment, other long-term, and termination benefits. Other long-term benefits are the leftover group. They are not post-employment and not termination benefits, and they are not expected to be settled wholly within twelve months after the end of the annual reporting period in which employees render the related service.

Typical examples are long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits, profit-sharing and bonuses payable twelve months or more after the period end, and deferred compensation. Compensated absences that are not expected to be fully used within twelve months also fall here.

The measurement idea is the same as for a defined benefit plan: use the projected unit credit method, discount using market yields on high-quality corporate bonds (or government bonds where there is no deep market), and deduct the fair value of any plan assets. The liability is the present value of the obligation less plan assets.

The key difference is only in recognition, not in measurement. The measurement is the same projected unit credit approach. Ind AS 19 says the measurement of other long-term benefits is usually not subject to the same degree of uncertainty as post-employment benefits. So it does not use the OCI route for remeasurements. Service cost, net interest on the net liability, and remeasurements are all recognised in profit or loss (unless another Ind AS requires or permits inclusion in the cost of an asset).

So the exam question is usually: classify the benefit correctly, then compute the liability, then show the right P&L charge. Classification decides where remeasurements go.

Key rules to remember

Net liability (asset): Present value of defined benefit obligation − Fair value of plan assets (if any); Use the projected unit credit method. Plan assets are rare for these benefits.
Total cost recognised in profit or loss: Service cost + Net interest on net liability + Remeasurements of the net liability; All three go to profit or loss (unless capitalised under another Ind AS). Nothing goes to OCI.
Service cost: Current service cost + Past service cost + Gain or loss on settlement; Past service cost is recognised in profit or loss at the earlier of the date of the plan amendment or curtailment and the date the related restructuring costs or termination benefits are recognised, with no vesting deferral.
Net interest: Net liability at start of period × Discount rate; Adjust for contributions and benefit payments during the period, weighted for timing.
Remeasurements: Actuarial gains and losses + Return on plan assets (excluding amounts in net interest) + Effect of asset ceiling change (excluding amounts in net interest); For other long-term benefits these are charged or credited to profit or loss.
Classification test: Settled wholly within 12 months after the end of the reporting period in which service is rendered? Yes: short-term. No: other long-term (if not post-employment or termination).; Check the expected settlement timing, not the legal due date alone.

How to solve Other Long-term Employee Benefits questions

Use this sequence for any question on other long-term employee benefits.

1Classify the benefit. Is it post-employment, termination, short-term or other long-term? Apply the twelve-month test after the period end of service.
2If it is other long-term, state that Ind AS 19 requires defined benefit style measurement but with remeasurements in profit or loss.
3Measure the present value of the obligation using the projected unit credit method and the stated discount rate. Deduct plan assets if given.
4Compute current service cost and any past service cost for the year.
5Compute net interest: opening net liability × discount rate, adjusted for payments if the question says so.
6Find remeasurements as the balancing figure between the opening liability plus costs less payments and the closing actuarial valuation.
7Add service cost, net interest and remeasurements to get the profit or loss charge. Show nothing in OCI.
8Write the closing liability and the journal entry, then state the disclosure if asked.

Quickest way: Roll-forward of the net liability

When to use it: Use when you are given an opening liability, discount rate, service cost, payments, and a closing valuation.

Write the opening liability.
Add current service cost and net interest (opening × rate).
Deduct benefits paid.
Compare with the closing actuarial valuation. The difference is the remeasurement, taken to profit or loss.
Total profit or loss charge = service cost + interest + remeasurement.
If the question gives no timing for payments, assume they occur at year end so interest is on the opening balance only.

Common mistakes in Other Long-term Employee Benefits

Taking remeasurements of other long-term benefits to OCI.
Students carry over the defined benefit gratuity treatment.
Fix: Remember the rule: OCI only for post-employment defined benefit plans. Other long-term benefits send all remeasurements to profit or loss.
Classifying long-service awards as post-employment benefits.
The word 'long-term' and the link to years of service look like retirement benefits.
Fix: Ask whether the benefit is paid while the employee is still serving. If yes, and not due within twelve months, it is other long-term. Post-employment benefits are payable after employment ends.
Treating all compensated absences as short-term.
Leave is usually used within a year.
Fix: Test the expected settlement. Accumulating leave not expected to be used wholly within twelve months after the period end is long-term. Measure the expected cost using the long-term approach.
Showing a separate 'actuarial loss' line in OCI in the journal.
Habit from the defined benefit plan format.
Fix: Debit employee benefit expense for the whole charge and credit the provision. Disclose the components in the note.
Applying interest on the closing liability.
Confusion about the base for net interest.
Fix: Use the opening net liability, adjusted for payments and contributions weighted for timing.
Deferring past service cost over a vesting period.
Memory of older accounting rules.
Fix: Recognise past service cost in profit or loss at the earlier of the date of the plan amendment or curtailment and the date the related restructuring costs or termination benefits are recognised, with no deferral over a vesting period.

Worked examples

Example 1

A Ltd gives employees a long-service award payable in cash after 10 years of continuous service. On 1 April 2026 the net liability for the award was ₹40,00,000. For 2026-27 the current service cost is ₹6,00,000, the discount rate is 8%, and ₹2,00,000 of awards were paid on 31 March 2027. The actuarial valuation of the obligation at 31 March 2027 is ₹50,00,000. There are no plan assets. Show the profit or loss charge and the closing liability.

Show the solution

Classification: the award is paid during service and not within twelve months, so it is an other long-term employee benefit. All remeasurements go to profit or loss.
Net interest = ₹40,00,000 × 8% = ₹3,20,000.
Roll-forward before remeasurement: 40,00,000 + 6,00,000 + 3,20,000 − 2,00,000 = ₹47,20,000.
Closing valuation is ₹50,00,000, so remeasurement loss = 50,00,000 − 47,20,000 = ₹2,80,000.
Total profit or loss charge = 6,00,000 + 3,20,000 + 2,80,000 = ₹12,00,000.
Check: opening 40,00,000 + charge 12,00,000 − paid 2,00,000 = ₹50,00,000.

Answer: Profit or loss charge is ₹12,00,000 (service cost ₹6,00,000, interest ₹3,20,000, remeasurement loss ₹2,80,000). Nothing goes to OCI. Closing liability is ₹50,00,000.

Example 2

B Ltd has a policy that employees may carry forward unused leave and encash it only on completing 15 years of service. For the year ended 31 March 2027 the opening liability was ₹20,00,000, current service cost is ₹3,00,000, the discount rate is 7%, and no payments were made. The closing actuarial valuation shows a liability of ₹22,00,000. The accountant proposes to show the actuarial gain in OCI. Advise on the treatment and compute the amounts.

Show the solution

Classification: the leave is not expected to be settled wholly within twelve months, so it is an other long-term benefit. The OCI proposal is wrong.
Net interest = ₹20,00,000 × 7% = ₹1,40,000.
Roll-forward before remeasurement: 20,00,000 + 3,00,000 + 1,40,000 = ₹24,40,000.
Closing valuation is ₹22,00,000, so there is a remeasurement gain of 24,40,000 − 22,00,000 = ₹2,40,000.
The gain reduces the expense in profit or loss. Net charge = 3,00,000 + 1,40,000 − 2,40,000 = ₹2,00,000.
Check: 20,00,000 + 2,00,000 = ₹22,00,000 closing liability.

Answer: The gain of ₹2,40,000 must go to profit or loss, not OCI. Net employee benefit expense is ₹2,00,000 and the closing liability is ₹22,00,000.

Exam tips

Start every answer with the classification and the twelve-month test. Markers give a mark for it.
State the one rule that separates this topic from gratuity: remeasurements go to profit or loss, not OCI.
In numerical questions, show the roll-forward and a closing check. It proves your remeasurement figure.
For compensated absences, read how the leave is used or encashed. Accumulating leave expected to be used beyond twelve months is long-term.
In case-scenario MCQs, watch for traps such as a termination benefit or profit-sharing due within twelve months, which are not other long-term benefits.

Practice questions from Ind AS 19 Employee Benefits

Other Long-term Employee Benefits in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Other Long-term Employee Benefits: frequently asked questions

What is the difference between post-employment and other long-term employee benefits?

Post-employment benefits are payable after employment ends, such as gratuity and pension. Other long-term benefits are paid during service or are not post-employment, and are not due wholly within twelve months. The main accounting difference is that remeasurements of post-employment defined benefit plans go to OCI, while for other long-term benefits they go to profit or loss.

How are long-term compensated absences treated under Ind AS 19?

If the leave is not expected to be settled wholly within twelve months after the period end of service, it is an other long-term benefit. You measure it using the projected unit credit method and discounting. All remeasurements are recognised in profit or loss.

Does Ind AS 19 give a simpler measurement method for other long-term benefits?

No. The obligation is still measured using the projected unit credit method, as for a defined benefit plan. The only simplification is in recognition: remeasurements go to profit or loss instead of OCI.

Where can I find the rule on other long-term benefits in Ind AS 19?

The rules are in the section Other long-term employee benefits (paras 153-157 of Ind AS 19), which comes after post-employment benefits and before termination benefits. Verify the paragraph numbers in your Ind AS text before quoting them.