Personnel costs in Horizon 2020

As with all costs, personnel costs must meet the general cost eligibility criteria. Additional special requirements apply, depending on the personnel cost category (e.g. employees, SME owners).

The time worked for the project must be documented in time sheets. The relevant record-keeping requirements are described in the Annotated Model Grant Agreement (AGA), article 18.1.2. If a person works exclusively (i.e. 100%) for an action, a so-called "Declaration" is sufficient. The EU Commission provides a non-binding template.

Personnel costs for employees

Personnel costs for employees are the most important personnel cost category in practice (article 6.2.A.1 of the Grant Agreement). One (1) hourly rate must be calculated for each employee, which is multiplied by the number of hours actually worked on the project (personnel costs = hourly rate multiplied by the project hours).

The hourly rate can be calculated on an annual or monthly basis. The annual hourly rate is calculated by dividing the annual gross gross costs (i.e. salary, ancillary wage costs and other mandatory salary components) by the annual productive hours (hourly rate = annual gross gross costs divided by the annual productive hours).

Three options are available for the annual productive hours:

1. "1720 hours" (fixed number of hours for persons working full time; or corresponding pro-rata for persons working part time as well as persons employed during the year)
2. "Individual annual productive hours": annual workable hours (according to law/ collective agreement/ employment contract taking into account holiday entitlement, public holidays etc.) plus overtime minus absences (sick leave etc.)
3. "Standard annual productive hours" of the beneficiary: calculated according to the usual cost accounting practice; the standard annual productive hours must be at least 90% of the annual workable hours (see option 2).

Please note for the annual calculation: If the ongoing financial year is not closed at the end of the reporting period, the hourly rate of the last closed financial year has to be taken for the calculation (Example: financial year from 01/01-31/12/2020; end of the reporting period = 31/10/2020; therefore the hourly rate of 2019 has to be taken for 2020).

The monthly hourly rate is calculated by dividing the monthly gross gross costs by one twelfth of the annual productive hours (option 1 or 3). Special payments like the 13th/14th salary must be taken into account on a pro rata basis.

Each organisation may use only one (1) option - monthly or annual hourly rate calculation - per financial year.

Salary components that are paid for additional work or expertise contributed to the project (“additional remuneration”) are not included in the gross gross costs. They are only eligible for non-profit organisations under certain conditions.

Alternatively to the declaration as "actual costs", personnel costs may also be declared as "average personnel costs" ("unit costs based on the usual cost accounting practices of the beneficiary").

Personnel costs for persons working in several funded projects

If the personnel costs of a person are reported in several funding programmes (e.g. Horizon 2020, 7th Framework Programme, national projects), a separate hourly rate must be calculated for each programme according to the relevant rules. This will most probably lead to different numbers of hours and may also lead to different denominators (if the non-eligible costs differ in the different programmes).

Please note that the personnel costs declared in EU-funded projects per person and year must not exceed 100% of eligible personnel costs in order to prevent double funding. Hours that are not charged to EU projects will not be checked in case of an audit.

Other categories of personnel costs

Eligible personnel costs also include:

article 6.2.A.2 GA: "Costs for natural persons working under a direct contract with the beneficiary other than an employment contract" - Please note: "Freie Dienstverträge" do not comply with the criteria given by the EU Commission as they are inconsistent with Austrian law. Nevertheless, the respective criteria of the categories "employees" (article 6.2.A.1 GA) or "other goods and services" (article 6.2.D.3 GA) may be checked on a case-by-case basis.

article 6.2.A.3 GA: "Costs for personnel seconded by a third party against payment": This category only includes the secondment of employees by organisations which are not temporary work agencies and do not pursue financial interests (i.e. not the provision of workers by professional agencies, in this case the conditions of category "other goods and services" (article 6.2.D.3 GA) apply).

article 6.2.A.4 ("Costs for SME owners who do not receive a salary") and article 6.2.A.5 GA ("Costs of beneficiaries that are natural persons not receiving a salary"): These categories refer to costs for SME owners and natural persons (being beneficiaries themselves) not receiving a salary. They receive a fixed hourly rate for their services (more information can be found under "Downloads").

Costs that are not eligible personnel costs

Temporary agency workers hired from agencies whose business model is to assign workers to user undertakings do not fall under the personnel cost category. These costs must be declared under “contracts” (category 6.2.D.3 “other goods and services”) or “subcontracts”.

Persons working under a contract for work or services and experts remunerated on a fee basis are also considered as “contracts” or “subcontracts”.

Questions & Answers

Question: Are executive allowances eligible?
Answer: Yes ("complements for holding a management post")

Question: Are profit distributions eligible?
Answer: “Real” profit distributions are not eligible. Complements based on the overall financial performance of the organisation are, however, eligible if the remaining requirements specified in the Annotated Grant Agreement, page 49 are met.

Question: Are variable salary components and bonuses eligible?
Answer: According to the Annotated Grant Agreement, variable complements (e.g. bonus additionally to the fixed salary) are eligible if they have a legal basis (law/ collective agreement/ employment contract) and if the amount is determined on the basis of objective and documented criteria. 

In all other cases they are considered either as “additional remuneration” (eligible only for non-profit organisations) or as non-eligible “arbitrary complements”.

More detailed information can be found ...

• in the Annotated Grant Agreement (AGA), article 6.2.A (personnel costs)
• in our FAQ-Document
• in the Decision of the European Commission about the unit costs for SME owners and natural persons not receiving a salary