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0 points_dps6y ago0 comments

This is in practice just a deferred salary scheme. Since the mandate attaches an unavoidable additional liability to every year of employment, that will get rolled into the total cost of employment by accountants.

So yes, when you collect the deferred salary it feels generous. But you were getting less salary up until that point in order to make the system solvent.

One may well prefer this arrangement, but one can't evaluate the generosity of the payment without also accounting for the cost that made it possible.

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3 comments · 1 top-level

lonelappde6y ago· 2 in thread

How is it unavoidable? If the employee leaves on their choice, is severance paid?

dgoldstein06y ago

I think they mean unavoidable from the company's point of view - they can't make you quit, so when they hire you, they have to assume if they ever need to lay you off, they'll need to afford your severance.

_dpsOP6y ago

Yes — I was slightly incomplete in my description, but you are exactly correct about what I meant. Company liabilities include things you are obligated to pay under uncertain future circumstances, so accountants have to make sure that such liabilities can be handled if they ever arise.

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