Personnel Costs

Personnel cost

  • A new method for calculating actual personnel costs using a daily rate (as opposed to an hourly rate in Horizon 2020) will be introduced under Horizon Europe to help simplify the programme and reduce the high error rate under this cost category experienced under its predecessor. 
  • The new methodology for calculating will be mandatory as stated in the draft Horizon Europe Model Grant Agreement (MGA).
  •  The main changes in the new approach are as follows:
    • There will be a single corporate formula for the calculation of all actual personnel costs.
    • The beneficiaries will need to calculate their personnel costs on the basis of the calendar year (from January to December), instead of their financial year (e.g. from August to July), as was the case in Horizon 2020. It will no longer be necessary to take into consideration the last closed financial year.

Costs of employees (or equivalent)

  • The costs of employees (or equivalent) will need to fulfil the general eligibility conditions and be directly related to personnel working for the beneficiary under an employment contract (or equivalent appointing act) and assigned to the action. 
  • As under Horizon 2020, the costs must be limited to salaries (including net payments during parental leave), social security contributions, taxes and other costs linked to the remuneration and must be a result of national law or the employment contract (or equivalent appointing act). 
  • The costs will also need to be calculated based on the costs actually incurred in line with the following methodology:
    • The daily rate for the person multiplied by the number of day-equivalents worked on the action (rounded up or down to the nearest half-day).
    • The daily rate must be calculated as the annual personnel cost for the person divided by 215 (it will be possible to deduct actual working days spent on parental leave from the fixed number of 215 days).
  • The number of day-equivalents declared per person must be identifiable and verifiable. Organisations will be able to continue to record personnel effort using their existing processes (e.g. on the basis of an hourly rate) and the daily rate will only be required to report personnel costs to the EC. 
  • Timesheets will not be mandatory unless they are considered a standard practice of the beneficiary. Otherwise a monthly declaration, signed by the person and the supervisor will be required, though the EC may accept alternative evidence if it considers that it offers an adequate level of assurance.  
  • If an organisation's internal timekeeping processes are based on the number of total hours worked, these will need to be converted to a 'day-equivalent' for each calendar year, with the following three conversion methods allowed:
  1. Conversion based on the average number of hours that a person must work for the beneficiary per working day under their contract;
  2. Conversion based on the standard annual productive hours of the beneficiary, if these constitute at least 90% of workable time (continuity with Horizon 2020); and
  3. Conversion based on a number of hours fixed by the EC: 1 day-equivalent = 8 hours (e.g. for beneficiaries with no reference in their contracts nor standard annual productive hours) - this is consistent with the 1720 annual productive hours in Horizon 2020 (215 days x 8 hours = 1720 hours).
  • There will still be the option for beneficiary uses average personnel costs (unit cost according) and for personnel which receives supplementary payments for work in projects (project-based remuneration).

Costs of natural persons working under a direct contract and costs of persons seconded from a third party against payment

  • The costs of natural persons (e.g. self-employed consultants) working under a direct contract other than an employment contract, as well as the costs of individuals seconded by a third party against payment, are also eligible under the 'Personnel costs' category. 
  • The person must be assigned to the action, work under conditions similar to those of an employee and the result of the work must belong to the beneficiary, unless otherwise agreed. 
  • The costs must be calculated based on a rate which corresponds to the costs actually incurred for the direct contract or secondment.
  • The rate cannot be significantly different from those for personnel performing similar tasks under an employment contract with the beneficiary.

SME owners/natural persons without salary

  • SME owners or natural persons (who are beneficiaries), but would not normally receive a salary, can declare as personal costs, the costs for work done on the action if they fulfil the general eligibility conditions and are calculated as unit costs in accordance with following methodology:

    • €5,080 divided by 18, multiplied by the country-specific correction coefficient (CCC) of the country where the beneficiary is established in force at the time of the call. The country-specific correction coefficient will be published in the Marie Skłodowska-Curie Actions (MSCA) Work Programme. 

Reporting personnel costs

  • The personnel cost calculation will cover a full calendar year (from January to December). 

  • In those cases where a single reporting period (normally 18 months) covers multiple calendar years the following methodology will need to be applied for each of the calendar years included:
    • actual personnel costs of the person incurred over those months divided by (215/12 months) multiplied by the number of months from January until the end of the reporting period).
    •  For example, Reporting Period 1 (RP1) runs from 1/09/2021 until 31/03/2023:
      • 2021 costs: actual personnel costs incurred for that person in 2021 divided by (215 multiplied by days worked by that person on the action from 1/09/2021);
      • 2022 costs: actual personnel costs incurred for that person in 2022 divided by (215 multiplied by days worked by that person on the action in 2022); and
      • 2023 costs: actual personnel costs incurred for that person in 2023 divided by (215 multiplied by days worked by that person on the action up until 31/03/2023).
        • Personal costs for RP1 will be equal to the costs for 2021 plus the costs for 2022 plus the costs for 2023.