(a) Proper records shall be maintained in respect of employee costs in such a manner as to enable the company to book these expenses cost centre wise or department wise with reference to goods or services under reference and to furnish necessary particulars. Where the employees work in such a manner that it is not possible to identify them with any specific cost centre or service centre or department, the employees cost shall be apportioned to the cost centre or service centres or departments on equitable and reasonable basis and applied consistently.
(b,) Employee Cost shall be ascertained taking into account the gross pay including all allowances payable along with the cost to the employer of all the benefits, including the cost of retirement benefits charged in the financial statements in an accounting period. In case of companies to which Indian Accounting Standards t
(c)
(d) apply, any re-measurement of such costs recognised in other comprehensive income shall not form part of the employee cost.
Bonus whether payable as a statutory minimum or on a shafing of surplus shall be treated as part of employee cost. Ex gratia payable in lieu of or in addition to bonus shall also be treated as part of the employee cost.
Remuneration payable to managerial personnel including Executive Directors on the Board and other officers of a corporate body under a statute shall be considered as part of the employee cost of the year under reference whether the whole or part of the remuneration is computed as a per cent. of profits.
Remuneration paid to non-executive directors shall not form part of employee cost but shall form Dart of administrative overheads.
Separation costs related to voluntary retirement, retrenchment, termination and other related matters shall be amortised over the period benefitting from such costs.
(t Employee cost shall not include imputed costs.
(g) Cost of idle time is ascertained by the idle hours multiplied by the hourly rate applicable to the idle employee or a group of employees.
(h) Where employee cost is accounted at standard cost, variances due to normal reasons related to employee cost shall be treated as part of employee cost.
Variances due to abnormal reasons shall be treated as part of abnormal cost.
(/ Subsidy or grant or incentive and any such payment received or receivable with respect to any employee cost shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income.
0 Any abnormal cost where it is material and quantifiable shall not form part of the employee cost.
(k) Penalties, damages paid to statutory authorities or other third parties shall not form part of the employee cost.
(l) The cost of free housing, free conveyance and any other similar benefits provided to an employee shall be determined at the total cost of all resources consumed in providing such benefits.
(m) Any recovery from the employee towards any benefit provided, namely, housing shall be reduced from the employee cost.
(n) Any change in the cost accounting principles applied for the determination of the employee cost should be made only if it is required by law or a change would result in a more appropriate preparation or presentation of cost statements of an enterDrise.
(o,) Where the employee services are traceable to a cost object, such employees' cost shall be assigned to the cost object on the basis such as time consumed or number of employees engaged or other related basis or similar identifiable measure.
(e) t
(p) While determining whether a particular employee cost is chargeable to a separate cost object, the principle of materiality shall be adhered to.
(q) Where the employee costs are not directly traceable to the cost object, the same shall be assigned on suitable basis like estimates of time based on time study.
(r) The amortised separation costs related to voluntary retirement, retrenchment, and termination or other related matters for the oeriod shall be treated as indirect cost and assigned to the cost objects in an appropriate manner provided that unamortised amount related to discontinued ooerations. shall not be treated as employee cost.
(s) Recruitment costs, training cost and other such costs shall be treated as overheads and dealt with accordingly.
(l) Overtime premium shall be assigned directly to the cost object or treated as overheads depending on the economic feasibility and the specific circumstance requiring such overtime.
(u,) ldle time cost shall be assigned direct to the cost object or treated as overheads depending on the economic feasibility and the specific circumstances causing such idle time.