31. Liabilities due to employee benefits

Based on an arrangement entered into by the representatives of staff and the Group, its employees are entitled to specific benefits other than remuneration, i.e.:

• jubilee bonuses;
• retirement and disability benefits;
• electricity allowance;
• an appropriation to the Company’s Social Benefits Fund.

All mentioned above benefits are fully financed by the Group.

The present value of the related future liabilities has been measured using actuarial methods. Calculations were made using basic individual data for the employees of Enea Group as at 31 December 2016 (taking into account their gender) regarding:

• age;
• length of service with Enea Group;
• total length of service;
• remuneration constituting the assessment basis for jubilee benefits as well as retirement and disability benefits.

Additionally, the following assumptions were made for the purpose of the analysis:

• the probable number of leaving employees was determined based on historical data concerning staff turnover in the Group and industry statistics,
• the value of minimum remuneration in the Polish economy since 1 January 2017 was assumed at PLN 2 000.00,
• pursuant to announcements of the Chairman of the Central Statistical Office, the average salary in the Polish economy, less premiums for retirement, pension and health insurance paid by the insured was assumed at PLN 2 917.14 (average amount assumed for the second half of 2010, which will constitute the basis for calculating the appropriation to the Company’s Social Benefits Fund in 2017.)
• based on assumptions defined at the corporate level, the increase of the basis for charges for the Employee Social Fund was adopted based on the increase of the average monthly wages in the national economy: 32.17% in 2018, 5.6% in 2019, 5.7% in the period 2020-2021, 5.6% in the remaining years of the forecast. In case of the basis’ change the increase in the average monthly wage in the national economy in 2017 of 5.2% was assumed for 2018. The remaining increase of the basis in 2018 is due to the full unfreezing of the basis for charges for the Employee Social Fund since 2018 which is assumed at the date of valuation of the risks.
• mortality rate and the probability of receiving benefits were adopted in line with the 2015 Life Expectancy Tables published by the Central Statistical Office,
• the value of the provision for disability benefits was not determined separately but the individuals receiving disability allowance were not taken into consideration in calculating the employee turnover ratio,
• standard retirement age was assumed under particular regulations of the Act of Pension, excluding these employees, which fulfill the conditions expected to earlier retirement,
• the long-term salaries and wages increase rate was adopted at the level of 1.5% in 2017 and 2.5% in the remaining years (as at 31 December 2015 at the level of 2.038% in 2016, 2.418% in 2017 and 2.5% in the remaining years),
• the interest rate for discounting future benefits was adopted at the level of 3.2% (as at 31 December 2015: 2.8%),
• value of the annual equivalent of the electricity allowance paid in 2017 was adopted at the level of PLN 1 391.74 (as at 31 December 2015 PLN 1 406.53),
• the rise in the cash equivalent of the electricity allowance was adopted for 2017at the level of -1.0%, for 2018 +1.9%, for 2019 +2.1 %, for 2020 +3.0 %, for 2021-2026 +3.1% and the following years at the level of 2.5% (as at 31 December 2016 the increase in 2016 at the level of -3.2%, for 2017 -1.5%, for 2018 +1.7%, for 2019 +4.1%, for 2020- 2021 at the level of 4.2%, for 2022 + 4.3%, for 2023 4.4%, for 2024 4.5%, for 2025-2026 4.6% and the following years at the level of 2.5%).

The Group also recognizes provision for coal allowance benefits. 

To determine the amount of provisions for employee benefits Projected Unit Credit Method was used, the same method was used for the analysis of sensitivity for defined benefit plan.

Sensitivity analysis for defined benefit plans

Sensitivity analysis for the following segments: trade, distribution, production and other

Sensitivity analysis for mining segment:

Maturity of liabilities due to defined benefit plans

Maturity of liabilities due to defined benefit plans for the following segments: trade, distribution, production and other:

Maturity of liabilities due to defined benefit plans for mining area:

Other long-term employee benefits - jubilee bonuses

Provision for the Voluntary Redundancy Program

Enea S.A.

On 22 December 2016 the Management Board of Enea S.A. adopted a resolution to launch the Generational Change Program (Program), which integral part is the Voluntary Redundancy Program (Program).

The Program was dedicated to Employees:

• employed under a contract of employment no matter the type and nature of their work;
• not being in the period of notice and who have not signed an agreement to terminate the employment contract outside the Program with a date of an employment contract in the future;
• are not employed under any employment agreements or any other civil law agreements in another company of the Enea Group, do not provide any temporary work to Enea S.A. or any other subsidiaries or affiliates of Enea S.A. under agreement with a temporary employment agency and

belonging to one of the following groups:

• Group I – Employees who acquired their pension rights until 31 December 2016 and have not terminated their employment agreements as of retiring, and Employees who will acquire their pension rights until 31 December 2017 (due to coming of official retirement age, coming to the age, at which they are entitled to bridging retirement for working in extraordinary conditions, pensions in reduced pension age for working in extraordinary conditions), 
• Group II – Employees who will acquire their pension rights in the period from 1 January 2018 to 31 December 2022 (due to coming of official retirement age, coming to the age, at which they are entitled to bridging retirement for working in extraordinary conditions, pensions in reduced pension age for working in extraordinary conditions),
• Group no. III - Employees who are to acquire pension rights after 31 December 2022.

The programme runs in the period between 28 December 2016 and 30 September 2017. As at 31 December 2016 Enea S.A. recorded provision for the Program in the amount of PLN 1 280 thousand.

Enea Centrum Sp. z o.o.

On the basis of a resolution No. 187/2015 dated 22 December 2015, the Management Board of Enea Centrum Sp. z o.o. decided to launch the Voluntary Redundancy Program in the company valid from 28 December 2015 to31 December 2016 in quartarely tranches, which can be launched on the basis of relevant resolutions of the Management Board of Enea Centrum Sp. z o.o.The first tranche of the Program is valid from 15 February 2016 to29 February 2016. The decisions for the first tranche of the Program were taken by the Employer in the period from 1 March 2016 till 31 March 2016.

By the Resolution no. 125/2016 of 22 December 2016, the Management Board of Enea Centrum Sp. z o.o. made a decision on launching Generational Change Programme in the company in 2017. The Voluntary Redundancy Programme constitutes an integral part of the aforementioned programme. The programme runs in the period between 28 December 2016 and 30 September 2017. The employees are entitled to submit applications for being covered by the Programme from 13 February 2017 to 28 February 2017, the Employer shall make the decision on covering a particular employee with the Programme in the period between 1 March 2017 and 31 March 2017.

The Program was dedicated to Employees who:

acquired their pension rights until 31 December 2016 and have not terminated their employment agreements as of retiring,

• will acquire their pension rights until 1 January 2017 to 31 December 2022 (due to coming of official retirement age, coming to the age, at which they are entitled to bridging retirement for working in extraordinary conditions, pensions in reduced pension age for working in extraordinary conditions), (Group I);
• will acquire their pension rights in the period from 1 January 2018 to 31 December 2022 (due to coming of official retirement age, coming to the age, at which they are entitled to bridging retirement for working in extraordinary conditions, pensions in reduced pension age for working in extraordinary conditions), (Group II);
• Employees who are to acquire pension rights after 31 December 2022 (Group III).

As at 31 December 2016 Enea Centrum Sp. z o.o. recorded provision for the Program in the amount of PLN 4 136 thousand.

Generational Change Programme was launched in other Group companies (provision amounting to PLN 50 931 thousand).