Note 18 - Liability for Employee Rights upon Retirement, Net
The obligation of the Group, under law and labor agreements, to pay severance pay to employees who are not covered by the pension or insurance plans as mentioned in section A below, as of December 31, 2017 and 2016 is NIS 15 million and NIS 12 million respectively, as included in the consolidated statements of financial position, under Liability for employee rights upon retirement, net.
| A. |
Post-employment benefit plans - defined contribution plan
|
The Group’s liability for severance pay for its Israeli employees is calculated pursuant to Israeli Severance Pay Law. The Group’s liability is mostly covered by monthly deposits with severance pay funds, insurance policies and by an accrual on the consolidated statements of financial position. For most of the Group's employees, the payments to pension funds and to insurance companies exempt the Group from any obligation towards its employees, in accordance with Section 14 of the Severance Pay Law-1963. Accumulated amounts in pension funds and in insurance companies are not under the Group's control or management and accordingly, neither those amounts nor the corresponding accrual for severance pay are presented in the consolidated statements of financial position.
| B. |
Post-employment benefit plans - defined benefit plan
|
The portion of the severance payments which is not covered by deposits in defined contribution plans, as aforementioned, is accounted for by the Group as a defined benefit plan, according to which a liability for employee benefits is recognized and in respect of which, the Group deposits amounts in central severance pay funds and in appropriate insurance policies. The total liability as at December 31, 2017 is NIS 27 million (2016 - NIS 25 million). The fair value of the plan assets, the severance pay fund, is NIS 20 million (2016 - NIS 20 million). The expense recognized in the consolidated statement of income for the year ended December 31, 2017 in respect of defined benefit plans, is NIS 3 million (2016 - NIS 3 million).
| C. |
As of December 31, 2017 the Group's liability for adaptation grants to employees is NIS 8 million (2016 - NIS 7 million). |
