2.25. Employee benefits

The Group creates a provision for future liabilities due to retirement, disability and post-mortem benefits, unused annual holiday, restructuring of employment and for incentive and retention programmes. Provisions for retirement, disability and post-mortem benefits are created using the actuarial method, as described in Note 3f and 11 hereof.

Employees of the Group are entitled to the following benefits:

Retirement benefits classified as post-employment defined benefit plans are available upon retirement for pensioners or disability pensioners. The term of employment includes all previously completed periods of employment based on an employment contract.

Provisions for unused holiday leave are calculated as the product of the daily basic salary and the number of outstanding leave days as at the end of the reporting period. Provisions for the unused holiday leave are presented in the consolidated financial statements under “Other liabilities”.

On 31 January 2020, the Extraordinary General Meeting of the Bank adopted a resolution on the introduction of an Incentive Programme for individuals with significant influence on the Bank’s risk profile (MRT).

Programme of the variable remuneration addressed to the individuals occupying managerial positions with significant influence on the Bank’s risk profile in line with the guidance included in Regulation of the Minister of Development and Finance of 6 March 2017 on the risk management system and internal control system, remuneration policy and detailed method of estimating internal capital in banks.

Performance evaluation of individuals included in the programme underlies the calculation of the variable remuneration.

Under the current remuneration scheme, the variable remuneration is divided into a non-deferred and deferred part and a part granted in the form of a financial instrument, which is the Bank’s shares (settled in accordance with IFRS 2) and the remaining part granted in cash (settled in accordance with IAS 19 „Employee benefits”).

The right to variable remuneration in the form of Bank shares is granted by issuing subscription warrants in a number corresponding to the number of shares granted, one warrant entitles to acquire one share. Payment of the variable remuneration expressed in the form of Bank shares, i.e. acquisition of Bank shares through exercise of rights from subscription warrants, takes place after the expiry of the retention period.

The retention period is at least 3 years. In case a variable remuneration is assigned in an amount higher than the amount considered as particularly high, the deferral period is a maximum of 5 years. The deferred part of the variable remuneration is divided into equal parts according to the number of years of the deferral period.

The cash payments under the programme are recognised in line with the projected unit credit method and settled over the vesting period (i.e. both in the evaluation period understood as the year in service to which the benefit pertains and in the period of deferring relevant portions of the benefit). The benefit value is recognised as a liability to employees in correspondence with the statement of profit or loss.

In connection with the implemented process of group layoffs at BNP Paribas Bank Polska S.A., the Bank paid a severance pay for employees made redundant at the initiative of the employer and for employees covered by voluntary departure schemes.

The programmes have been completed by the reporting date, except for the deferred parts concerning individuals with significant influence on the Bank’s risk profile, in accordance with the Bank’s policy in this respect.