Personnel Costs — Employees (Article 6.2.A.1)

6.2 Specific eligibility conditions for each budget category For each budget category, the specific eligibility conditions are as follows:

1. Specific eligibility conditions for each budget category Article 6.2 refers to specific eligibility conditions, applicable per budget category.

All programmes follow in principle the basic set of common budget categories from the General MGA (A. Personnel, B. Subcontracting, C. Purchases and D. Other). However not all programmes use all the cost categories and some programmes may have special/additional budget categories.

The eligibility conditions for all currently used budget categories are described in the following sections.

For a consolidated list of eligibility issues relating to specific situations/legal framework in individual countries, see AGA — List of country-specific issues.

Direct costs

A.1 Employees (all programmes except SMP ESS, CUST/FISC)

The national projects reference is the remuneration defined in national law, collective labour agreement or written internal rules of the beneficiary applicable to work in projects funded by national schemes.

— Calculation

1.1 What? If eligible under the Grant Agreement (all programmes except SMP ESS, CUST/FISC or where declared ineligible in the call conditions), the beneficiaries/affiliated entities may charge 'Costs for employees or equivalent'.

This budget category covers the costs for employees or equivalent that worked in the action, i.e. persons working for the beneficiary on the basis of an employment contract or equivalent appointing act.

'Equivalent appointing act' means the appointing acts of civil servants (who do not sign employment contracts, but receive official nominations for their posts).

ONLY costs for personnel assigned to the action (i.e. working for the project according to internal written instructions, organisation chart or other documented management decision) can be eligible.

Record-keeping

The monthly declaration of days worked in the project correctly signed (see Article 20) OR reliable time records will normally be sufficient proof of the assignment to the action — unless there is other contradicting evidence (e.g. the employment contract indicates that the person was hired to work on another project).

What not? Cost of persons who work for the beneficiary, but NOT with an employment contract or equivalent appointing act (e.g. staff provided by a temporary work agency, seconded staff, self-employed persons with a direct contract with the beneficiary).

1.2 Costs for employees (or equivalent) must be declared as:

− actual personnel costs (standard case)

or

− unit costs in accordance with the usual cost accounting practices ('average personnel costs'; if option applies in Grant Agreement; option in HE, DEP, EDF, CEF, UCPM, HUMA).

1.3 The costs for employees (or equivalent) must comply with the eligibility conditions set out in Article 6.2.A.1, in particular:

− fulfil the general conditions for costs to be eligible (i.e. incurred during the action duration, necessary, etc.; see Article 6.1(a) and (b)) and

− be paid in accordance with national law, the collective labour agreement and the employment contract/equivalent appointing act.

Generally, you may include, for each person concerned, the following:

− fixed salary

− fixed complements, if they are unconditional entitlements for the person (e.g. family allowance and contributions to medical insurance schemes set out in national law, complementary pension plan contributions set out in the collective labour agreement or other binding documents such as staff regulations)

− variable complements, e.g. bonuses, if:

− they are paid based on objective conditions set out, at least, in the internal rules of the beneficiary

− they are paid in a consistent manner, e.g. not just for actions supported by EU grants, and

− where applicable, subject to the specific eligibility conditions for supplementary payments (see specific cases below)

− social security contributions (mandatory employer and employee contributions)

− taxes linked to the remuneration (e.g. income tax withholding)

− other costs and payments linked to the remuneration if they are justified and registered as personnel costs in accordance with the beneficiary's usual remuneration practices (e.g. benefits in kind like company car made available for the private use, lunch vouchers, accrual for unconditional severance payments mandatory under national law or other binding documents such as collective labour agreements or other binding documents such as staff regulations).

You may NOT include:

− any part of the remuneration which has not been an actual cost for you (for example, salaries reimbursed by a social security scheme or a private insurance in case of long sick leave or maternity leave)

− payments of dividends to employees (profit distribution in the form of dividends)

− variable complements based on commercial targets or fund raising targets (because neither incurred in connection with the work of the action, nor necessary for its implementation)

− arbitrary bonuses (i.e. bonuses which are not paid based on objective conditions set out, at least, in the internal rules of the beneficiary or bonuses that are not paid in a consistent manner)

− bonuses that depend on budget availability on the specific project (e.g. paid only if there are remaining funds in the budget of a project).

'Objective conditions' means conditions which allow to identify who (e.g. what category of employees) will receive how much (e.g. 5 € extra per hour, 10 % extra salary in each month of full dedication) in what cases (e.g. time worked as lead researcher in cooperative projects; an impartial and transparent assessment procedure on performance).

1.4 Calculation of the personnel costs. In most cases you have to calculate your personnel costs for the action as follows:

{Personnel costs} = {Day-equivalents} × {Daily rate}

To be calculated per person for each reporting period.

{Day-equivalents}: Up to a declarable maximum of: {((215 / 12) multiplied by the number of months within the reporting period) multiplied by the working time factor}

{Daily rate}: {actual personnel costs during the months within the reporting period} divided by {maximum declarable day-equivalents}

You must do these calculations normally once per reporting period (RP)6 for each person who worked in the action.

Adaptations may be needed for specific cases, such as project-based remuneration or average personnel costs, depending on the applicable options in the Grant Agreement (see specific cases below). Check the Data Sheet of your Grant Agreement, if specific options apply.

Regarding the calculation of day-equivalents worked in the action:

It is the sum of the day-equivalents actually worked for the action, rounded to the nearest half-day, and recorded in the monthly declarations or in your time-recording system (if you have a reliable time-recording system where you record, at least, all the actual time worked in the action).

For details on the declarations and on how to convert your working time on the action into day-equivalents, see explanations in Article 20.

Alternatively, the calculation may be done separately for each calendar year within the reporting period, if this is consistently applied. In that case, the 'number of months within the reporting period' referred to in the formulas is to be understood as the number of months of the respective calendar year that are within the reporting period.

Horizontal 215-days ceiling

In case of work on multiple actions per year, the total

Regarding the maximum declarable day-equivalents:

To calculate the daily rate, you first need to determine the maximum declarable day-equivalents. Since you may not declare more than 100% of your personnel cost, the number of declarable day-equivalents in each reporting period is capped. The maximum declarable day-equivalents for each reporting period are calculated as follows:

{((215 / 12) multiplied by the number of months [during which the person is employed] within the reporting period) multiplied by the working time factor [e.g. 1 for full-time, 0.5 for 50% part time etc.]}

You will round up or down to the nearest half day-equivalent.

Examples: The reporting period runs from 01/01/2022 to 30/06/2022 (6 months): Full-time case: The person is a full-time permanent employee hired in 2020. The maximum number of day-equivalents to be used in the daily rate formula would be: ((215 / 12) x 6 [months]) x 1 [full-time] = 107,5 Part-time case: The person is a 50% part-time permanent employee hired in 2020. The maximum number of day-equivalents to be used in the daily rate formula would be: ((215 / 12) x 6) x 0.5 [for 50% part-time] = 54 New hire case: The person is a 50% part-time employee hired on 1/06/2022. The maximum number of day-equivalents to be used in the daily rate formula would be: ((215 / 12) x 1 [only June 2022]) x 0.5 = 9

The number of months used for the calculation either equates the length of the reporting period, or the length of employment of the person during this reporting period, if the latter is shorter (e.g. the person is newly hired or no longer employed at any point during the reporting period).

Example

In the reporting period from 01/01/2022 to 31/03/2023 (i.e. 15 months) you hire a new person starting in full-time on 16/01/2023, with 2,5 months left in the reporting period. The number of months for the calculation of the maximum declarable day-equivalents is accordingly 2,5, not 15. The maximum number of declarable day-equivalents is ((215/12) x 2,5) x 1 = 45 [rounded to the nearest half day-equivalent].

For the purpose of all personnel cost calculations a month is considered to have 30 days.

Example

In the reporting period form 01/05/2022 to 31/03/2023, you calculate the number of months to be used when an employee is hired from 05/05/2022 until 20/10/2022: - May: 26 days as of the day of being hired, i.e. 26 / 30 = 0,87 months - June-September: 4 months - October: 20 days until end of employment, i.e. 20 / 30 = 0,67 months That is for the person in the reporting period: (26 / 30) + 4 + (20 / 30) = 5,54 months.

If the working time factor changes for the person during the reporting period (e.g. a change from part-time to full-time, change of contract), you calculate the maximum declarable day-equivalents separately for the months before and after this change of condition and add them up afterwards to calculate the maximum declarable day-equivalents for the reporting period.

Example:

In the reporting period from 01/01/2022 to 31/03/2023, you work full-time in 2022 and 50% part-time in 2023. You calculate the maximum declarable day-equivalents separately for 2022 and 2023 (because conditions have changed). 12 months of full-time work: ((215 / 12) x 12) x 1 = 215 3 months of part-time work: ((215 / 12) x 3) x 0.5 = 26,88 Total: The maximum declarable day-equivalents for the reporting period are therefore 215 + 26,88 = 242 (rounded to the nearest half day-equivalent).

Regarding the calculation of the daily rate:

You have to calculate a daily rate per person for the reporting period. For this, (irrespective of the situation, i.e. full-time, part-time, partial hire, etc), you have to use the following formula:

{actual personnel costs during the months within the reporting period}

divided by

{maximum declarable day-equivalents}

The actual personnel costs for the person are those eligible cost recorded in accordance with your usual cost accounting practice in your (statutory) accounts until the end of the reporting period for which you are calculating the daily rate.

Example

For a reporting period running from 01/01/2022 until 31/03/2023, to calculate the daily rate (which you will apply to days worked by the person in the action from 01/01/2022 until 31/03/2023) you will take into account the total personnel costs of the person recorded in your statutory accounts for the 12 months in 2022 and the 3 months in 2023 (January, February and March).

If in line with the conditions described above, the personnel costs can include any component that is legally obligatory by national law, the employment contract, or a similar act. Apart from taxes and social security contributions, this may also include for example the thirteenth salary, Christmas pay, etc. These personnel costs may also include supplementary payments for personnel assigned to the action (including payments on the basis of supplementary contracts regardless of their nature) if that is your usual remuneration practice for the kind of work or expertise required and based on objective criteria used regardless of the source of funding (i.e. not just for the individual EU grant).

Example

In the reporting period from 01/12/2021 to 31/05/2023 (18 months), the person works 50% part-time from 01/12/2021 to 31/05/2022 (6 months) and full-time afterwards (12 months). You calculate the maximum declarable day-equivalents and the daily rate for the reporting period as follows: Maximum declarable day-equivalents: Due to a change from part-time to full-time work, you need to calculate the declarable day-equivalents separately for the period from 01/12/2021 to 31/05/2022 and afterwards. The 6 months of part-time work calculation would be ((215 / 12) x 6) x 0.5 = 53.75 for the part-time which you would have to add up with the result of the calculation for the 12 months full-time period, which is 215 (i.e. ((215 / 12) x 12) x 1), the maximum number of declarable day-equivalents for the reporting period would be 53.75 + 215 = 269 (rounded to nearest half day-equivalent). Daily rate: After taking into account all eligible elements (salary plus social contribution and taxes etc.) you recorded in your accounts a total eligible cost of EUR 15 000 personnel costs for working 6 months part-time and EUR 60 000 for 12 months full-time for a total cost of EUR 75 000. The daily rate for the person is calculated by dividing the personnel costs for the 18 months of work within the reporting period with the maximum declarable day-equivalents, i.e. EUR 75 000 divided by 269 = EUR 278.81 daily rate.

For personnel costs related to drafting and submitting the final reports incurred after the action duration (for example related to participation in a project review or to the preparation of a final report; see Article 6.1),, the daily rate to be used is the one for the last reporting period. The extra days should simply be added to the days declared in the final reporting period; there is NO need to calculate a separate daily rate for them. The threshold of

maximum declarable day-equivalents (see Article 6.2.A.1) will however NOT apply to the additional days.

Specific cases (costs for employees or equivalent (A.1)):

Teleworking

Teleworking days are accepted if:

− the beneficiary has in place clear rules allowing for teleworking, and

− the teleworked days were in line with those rules (for example: they did not exceed the maximum days of teleworking allowed by the beneficiary’s rules).

End-of-contract indemnities during the action

If the employment of a person working

Example

6 month into the second reporting period (both RPs of 12 month) of an action, a full-time employee, having worked a total of 154 day-equivalents on the action, stops being employed and is entitled to an end-of-contract indemnity of EUR 10 750. The employee has accumulated this indemnity over 5 years (60 months) of employment. You have determined that 3000€ of this are attributable to the time of employment during the action (taking into account e.g. changes in salary, indemnity conditions, working time, etc). To determine the portion of the indemnity chargeable to the grant, you first divide EUR 3000 indemnity (corresponding to the time of employment during the action) by the maximum declarable day-equivalents of the person during the action, i.e. {EUR 3000 divided by (215 [maximum declarable day-equivalents RP1] + 107,5 [maximum declarable day-equivalents RP2]) } = EUR 9,30 per declarable day-equivalent. Then you multiply the indemnity amount per day-equivalent with the day-equivalents actually worked on the action, i.e. EUR 9,30 x 154 [day-equivalents worked on the action in RP1+RP2] = EUR 1432,20.

Parental leave (option in HE, HUMA)

If this option is activated in the Grant Agreement,

Example

In a reporting period from 01/12/2021 to 31/01/2023 (14 months), an employee working full-time on the action takes four months of parental leave after the birth of a child, that is 71,67 day-equivalents (i.e. {((215/12) x 4 [months on parental leave]) x 1 [working time factor as per contract]}). The maximum number of declarable day-equivalents for the reporting period is calculated as follows: {((215/12) x 14 [months]) x 1} minus 71,67 day-equivalents of parental leave = 179,16, rounded to 179 maximum declarable day-equivalents for the reporting period.

You will use this number (179) to calculate the daily rate, i.e. (actual personnel costs during the reporting period) divided by 179.

Multiple parallel or consecutive contracts

If a person is employed with more than one

Contracts without fixed salary/hours — The maximum number of declarable day-equivalents for employees that do not have a fixed amount of salary and working hours defined in their contract but only an hourly rate (where allowed by applicable law and not fitting under other cost categories, e.g. SME owners, subcontracting) can be calculated as follows:

{((total salary paid to the employee in the reporting period) divided by (hourly rate fixed in the employment contract)) divided by 8 [default day conversion factor]}

Example

A person does not have a fixed amount of working time and salary set out in the contract but the contract specifies that the persons earns EUR 10/hour when called to perform a certain task. Under the contract, you paid the persons EUR 7000 during the reporting period. The maximum declarable day-equivalents are = EUR 7000 / 10 [hourly rate] / 8 = 87,5 for the reporting period.

Staff provided by a temporary work agency

Such staff can NOT be charged under this

Project-based remuneration (option in HE)

If this option is activated in the Grant

Note that for Horizon Europe, there are all in all three different ways how to calculate the daily rate: Case 1A: employee whose remuneration is fixed, i.e. same remuneration, regardless whether they are involved in specific projects or not (actual costs; standard case, see 2.1.4 above) Case 1B: employees whose remuneration increases through supplementary payments depending on whether they work in specific projects (actual costs; specific case ‘project-based remuneration’, this section) Case 2: beneficiaries declaring personnel costs as unit costs in accordance with their usual cost accounting practices (unit costs; specific case ‘average personnel costs’, see next specific case below).

Project-based remuneration (Case 1B) should be used for employees (or equivalent) whose level of remuneration (daily rate, hourly rate) increases when and because the employee works in (EU, national or other) projects.

Example

An employee who gets a bonus or a new contract with a higher salary level for working in a project.

Employees whose salary does not increase when working in projects are covered by Case 1A (not Case 1B); even when:

− the employment contract was signed explicitly to work in the action or

− the contract covering the work in the action is additional to the main contract with the employee but has the same remuneration level as the main contract (i.e. same hourly/daily rate) or

− part of the work in the action was done during overtime and the overtime hours are paid at a higher rate resulting from national law, collective agreement or employment contract, provided that such higher rate does not depend on projects.

For project-based remuneration (Case 1B), the daily rate must be calculated as follows:

Step 1 — Calculate the Case 1B action daily rate per person:

{actual personnel costs for work on the action [incl. project-based supplementary payments, bonuses, increased salary, etc] during the months within the reporting period}

divided by

{day-equivalents worked by the person on the action during the months within the reporting period}

For the calculation of the action daily rate you may include the same elements in the personnel costs as in Case 1A for the daily rate PLUS all bonuses you paid which were triggered by the participation in the action (even if those bonuses were not based on objective conditions). Bonuses triggered by the participation of the employee in other projects must be excluded.

Step 2

Compare the action daily rate with the national project daily rate, i.e. the (theoretical) daily rate that you would pay to the person for work in national projects, in accordance with your usual remuneration practices. The daily rate to be used for the EU grant financial statement will be the lower of the two. In other words, if the action daily rate is higher than the national project daily rate, then you will have to use the national rate for that reporting period.

'National projects' are to be understood in the large sense, meaning all types of projects funded under any type of national (public or private) funding scheme, including projects co-financed by EU funds that are managed by EU Member States (e.g. Regional Funds, Agricultural and Fisheries Funds). This must exclude EU grants as defined in the Grant Agreement, i.e. actions funded by the EU Commission, EU executive agencies or other funding bodies, which do not qualify as national projects.

The (theoretical) national project daily rate must be calculated the as follows:

{theoretical personnel costs for similar work in a national project over the same number of months as the reporting period}

divided by

{maximum declarable day-equivalents}

The remuneration to which the person would be entitled to for work in national projects must be defined:

− either in regulatory requirements (such as national law or collective labour agreements)

− or in your written internal remuneration rules.

If the regulatory requirements or your written internal remuneration rules:

− provide for a bonus range (e.g. between 500 and 1000; between 10% and 50%) or a maximum ceiling (e.g. up to 50) rather than a precise amount per day or per hour, the remuneration to which the person would be entitled to (national project daily rate) is the average of the remuneration that the person received for work in national projects in the complete year before the end of the reporting period (e.g. calendar, financial or fiscal year depending on the beneficiary's usual cost accounting practices) for which data is available (see further below).

Example

If the beneficiary has calculated the action daily rate for a 18 month-reporting period from 01/09/2021 to 28/02/2023, the average of the remuneration that the person received for work in national projects could be calculated based on the data of the complete calendar year 2022 (if available, otherwise of 2021 or the latest available calendar, financial or fiscal year before 2021).

− provide for different levels of remuneration depending on the staff category, the remuneration to which the person would be entitled to is the one of the category to which the person belongs

− provide for different levels of remuneration depending on the type of nationally-funded projects (and/or the type of work within these projects), the remuneration to which the person would be entitled to is the one applicable to the type of project (and/or work) that is closest to the action

− change over the reporting period, the remuneration to which the person would be entitled to is the one that was applicable for the larger part of that reporting period.

If there are no regulatory requirements and you do not have internal rules defining objective conditions on which the national project daily rate can be determined, but you can demonstrate that your usual practice is to pay bonuses for work in national projects, the national project daily rate is the average of the remuneration that the person received in the last complete year (calendar, financial or fiscal year, see above) before the end of the reporting period for work in national projects calculated as follows:

{(total personnel costs of the person in the last complete year) minus (remuneration paid for EU actions during that complete year)}

divided by

{215 minus (days worked in EU actions during that complete year)}

'EU actions' are EU grants as defined in the Grant Agreement (i.e. awarded by EU institutions, bodies, offices or agencies, including EU executive agencies, EU regulatory agencies, EDA, joint undertakings).

'Total personnel costs' covers all types of contracts with the person that qualify as personnel costs under Article 6.2.A.

If during the last reference period the person worked for the beneficiary only in EU grants as defined in the Grant Agreement, you must calculate the national project daily rate using the year before (or the last year in which the person worked in a national project).

If the person is a new employee hired in the reporting period, their national project daily rate, calculated according to the formula above, is the one applicable to the employee whose base salary (salary without bonuses) is the most similar to that person's.

Average personnel costs (option in HE, DEP, CEF, EDF, UCPM, HUMA,) — If this option is activated in the Grant Agreement , beneficiaries who consistently calculate average rates for their staff as part of their analytical cost accounting system, can use these average rates for the daily rate.

You can use this method, provided that:

− the daily rate is calculated using the actual personnel costs recorded in your accounts, excluding any ineligible cost or costs already included in other budget categories (no double funding of the same costs)

Therefore, you may have to adjust your usual methodology in order to remove:

− costs that are ineligible under the Grant Agreement

Example

The daily rate in accordance with the beneficiary's usual cost accounting practices contains taxes not linked to the remuneration. Those taxes are ineligible and must be removed when calculating the daily rates for the action.

− costs that are already included in other budget categories

Example

Beneficiaries whose cost accounting practices for personnel costs include indirect costs. Indirect costs must be removed from the pool of costs used to calculate the daily rate charged to the action because indirect costs must be declared using a flat rate. Personnel costs cannot include any indirect costs.

If your usual methodology includes budgeted or estimated elements, we can only accept those, if they:

− are relevant (i.e. clearly related to personnel costs)

− are used in a reasonable way (i.e. do not play a major role in the calculation)

− correspond to objective and verifiable information (i.e. their basis is clearly defined and you can show how they were calculated)

Example

Calculating average 2021 daily rates by using 2020 payroll data and increasing them by adding the CPI (consumer price index) on which the basic salaries are indexed.

− you apply your cost accounting practices in a consistent manner, based on objective criteria that must be verifiable if there is a check, review, audit or investigation. You must do this no matter who is funding the action.

This does not mean that cost accounting practices must be the same for all your employees, departments or cost centres. If, for example, your usual cost accounting practices include different calculation methods for permanent personnel and temporary personnel, this is acceptable. However, you cannot use different methods for specific actions, projects or persons on an ad-hoc basis.

Example: acceptable

Individual (actual) personnel costs are used for researchers, average personnel costs (unit costs calculated in accordance with the beneficiary’s usual cost accounting practices) are used for technical support staff. Example (unacceptable): Average personnel costs are used to calculate costs in externally-funded projects only.

If your usual cost accounting practice is to calculate hourly rates instead of daily rates, you must convert the hourly rate into a daily rate as follows:

Daily rate = hourly rate x 8

Alternative: If you have a usual cost accounting practice determining the standard number of annual productive hours of a full-time employee, you can alternatively multiply by the number of hours resulting from the following formula (instead of by 8):

{The higher of: (the standard number of annual productive hours of a full-time employee according to your practice) OR (90 % of the standard annual workable hours of a full-time employee)} divided by

[…formula incomplete in source text extraction; consult the official AGA PDF for the full denominator]