General principles
As with all costs, personnel costs must meet the general eligibility criteria (e.g. actually incurred, project-related, reasonable, and properly documented). In addition, specific rules apply depending on the personnel category (e.g. employees, SME owners).
A key requirement is the correct calculation of personnel costs (strictly in line with the GA rules!) as well as the complete and consistent documentation of working time (via declarations and/or time-sheets).
If a person works on several EU-funded projects, costs must be calculated SEPARATELY ACCORDING TO THE RESPECTIVE RULES OF EACH PROGRAMME. To avoid double funding, a maximum of 215 days per person per year (or the below explained corresponding calculated day-equivalents) may be declared.
Documentation and supporting evidence
The time worked on the project must be documented using Declarations (or, in case of working time recorded in hours time-sheets are allowed). These may be checked during audits by the European Commission or external auditors.
Detailed requirements are set out in the Annotated Grant Agreement (AGA), particularly in the explanations to Article 20.1. The European Commission provides a (non-binding) template for declarations.
Important:
- Records must be consistent and plausible.
- If both declarations AND time-sheets are used, they must not contradict each other.
- Without adequate supporting documentation, personnel costs may be rejected during an audit.
Examples of additional supporting evidence (“alternative evidence”):
- Annual payroll records
- Collective agreements / internal rules
- Employment contracts (including amendments)
- Documentation of cost calculations
Personnel costs for employees
In this category (A.1) costs for employees (according to the definition of Austrian law) are declared.
In Horizon Europe, the costs must be declared using day-equivalents.
Actual personnel costs are calculated per reporting period and per person by using the following formulas:
Step 1:
| maximum declarable day-equivalents = ((215 ÷ 12) x months of employment during reporting period) x working time factor |
The working time factor reflects full-time or part-time employment of the organisation. The value “1” corresponds to full-time, lower values correspond to the respective part-time equivalent.
Example: The full-time equivalent in the organisation is 38.5 hours, therefore the value "1" refers to full-time, the value "0.5" to 19.25 hours etc.
The result (i.e. the maximum declarable day-equivalents) must be rounded up or down to the nearest half-day.
Step 2:
| daily rate = actual personnel costs ÷ maximum declarable day-equivalents |
Eligible personnel costs are those recorded in the beneficiary’s accounts.
Step 3:
| eligible personnel costs = daily rate x day-equivalents |
The day-equivalents are derived from the declarations/time-sheets. If time is recorded in hours, it must be converted into days for the calculation per reporting period and the result needs to be rounded up or down to the nearest half day - by using one of the following methods:
- Fixed rate: 8 hours = 1 day
- Contractual daily working time (if clearly defined)
- Standard productive time: (spread between standard annual productive hours for full-time according to the usual practice and 90% of standard workable hours for full-time) ÷ 215
Instead of actual personnel costs, average personnel costs (unit costs) may be used, if this is allowed under the Grant Agreement.
Detailed information: Annotated Grant Agreement, Artikel 6.2.A.1
Other personnel cost categories
The following also fall under personnel costs:
Natural persons under a direct contract and seconded persons
These are only eligible if the conditions defined in the GA are met (in particular, conditions similar to employment). Seconded persons must not be provided by temporary work agencies (in this case the costs are to be reported under the cost category C.3).
The criteria defined by the European Commission are NOT fulfilled in the case of “freie Dienstverträge”, as these criteria (in particular subordination and presence requirements) are in conflict with Austrian law. However, the costs are not lost: if the respective conditions are met, they may be eligible either under the category “employees” (A.1) or “other goods, works and services” (C.3).
Detailed information: Annotated Grant Agreement, Artikel 6.2.A.2 and A.3
SME owners and natural persons without a salary (A.4)
These are reimbursed using fixed daily rates (unit costs).
Please refer to our factsheet “SME owners and natural persons (as beneficiaries) without a salary in Austria”.
Detailed information: Annotated Grant Agreement, Artikel 6.2.A.4
Which persons are NOT considered personnel costs?
Among others:
Staff provided by temporary work agencies (i.e. companies whose business purpose is the provision of staff) must be declared, where applicable, as service contracts (cost category C.3 “other goods, works and services”) or as subcontracting (cost category B).
Contractors (“Werkvertragsnehmer”) and experts paid on a fee basis must also be declared, where applicable, as service contracts or subcontracting.
Salary components
Eligible components include, among others:
- Basic salary (including 13th and 14th salary)
- Fixed salary components defined by law, contract or collective agreement (e.g. mandatory allowances)
- Social security contributions and taxes
- Benefits in kind (e.g. company car, meal vouchers, company housing), if part of remuneration
Variable salary components (e.g. bonuses) are only eligible if:
- they are based on objective criteria,
- they are defined in internal rules,
- they are not project-specific (i.e. applied generally), and
- they do not depend on project funding
Objective criteria for bonuses are met if the following three conditions are fulfilled:
- identification of the specific employee
- determinability of the amount (e.g. EUR 5 extra per hour, 10% bonus of annual salary)
- justification of the bonus (e.g. role as project manager)
NOT eligible, among others:
- Salary payments that do not constitute actual costs for the beneficiary (e.g. parental leave, partial retirement)
- Dividends
- Arbitrary or project-dependent bonuses
- Provisions (e.g. for future bonuses)
Common pitfalls
Documentation/time records: Often do not meet all EU Commission requirements or are missing entirely.
Day-equivalents: Often calculated incorrectly or not rounded to the nearest half-day.
Salary components: Ineligible components are often included. Termination payments are eligible, but must NOT be included in the daily rate; they must be calculated separately (only the portion relating to the project period may be included, e.g. jubilee payments, unused leave payments).
Only salary components that have already been incurred as actual costs are eligible (NOT e.g. provisions).
Changes in employment: If there is a change in employment conditions and/or (significant) salary differences (e.g. intern becomes project staff), the maximum day-equivalents must be calculated separately for each period and then added together. The daily rate is then calculated based on the total personnel costs.
Travel costs: These are sometimes included in payroll accounts but must NOT be included in the daily rate calculation. Parts of travel costs may be subject to payroll-related charges, which must be excluded.
Recommendations for practice
To ensure smooth cost reporting:
- Early coordination and close cooperation with HR and controlling
- Consistent and well-documented calculation methods
- Ongoing checks during the project
- Proper cost allocation and accounting
- Complete documentation of all calculations
Further information