7 typical mistakes in calculation of eligible personnel costs in H2020

Personnel costs generally make up the majority of a project budget in Horizon 2020. Consequently, it is also the most common field for potential mistakes and errors. The complexity of the eligibility rules and the various exceptions are the main reasons why most beneficiaries suffer when it comes to calculating the eligible personnel costs in their H2020 projects.


  1. What is eligible basic salary?

Eligible basic salary is the salary an employee would get for his or her usual work and duties, plus all the mandatory charges. In practice, it means that one should not get a different (usually higher) salary just because she/he is now working on an H2020 action.


  1. What other fiscal or in-kind benefits can be added to basic salary?

The good news is that basically any additional salary component, benefit, even in-kind benefit could be added to the eligible basic salary costs. The bad news is that all of these additional components must be based on the usual remuneration policy of the Beneficiary i.e. it must not be H2020 specific!


  1. Financial year or monthly-based calculation?

Each beneficiary must choose whether they calculate the hourly rates of each employee once a year for the entire year (fiscal/financial year calculation), or once a month (monthly-based calculation). This does not seem to be too difficult the problem is that one Beneficiary must use only one of these methods for all its projects and employees: larger organisations often forget to centralise these processes and use both methods in parallel (by different faculties or departments), which leads to inconsistencies in hourly rates.


  1. Which productive hours should be used?

This is the next keystone that must be selected at Beneficiary level. Each of the three options (1. 1,720 EC standard; 2. Actual for each employee; or 3. Beneficiary standard) has different advantages and disadvantages, so one should consider it carefully which of them would be the most beneficial for the legal entity: not only cost-wise, but also time-wise.


  1. What is then the eligible hourly rate?

The hourly rate calculation is very simple once the Beneficiary understands and implements the protocols for the calculation routes (i.e. fiscal or monthly-based; standard(s) or actual): total eligible personnel costs divided by the total productive hours.


  1. When and why do we need timesheets?

Once we have the eligible hourly rate for a particular person, only then must we look into his/her timesheets to see how many hours he/she worked during the period concerned. If we select the financial year based calculation, we summarise the project hours per financial year concerned, and multiply the two numbers. When we use the monthly option, the protocol is on a monthly level.


  1. What is then the eligible personnel costs?

The key here is to identify correctly (A) what is the total eligible salary costs for a concerned employee working on the project for the selected timeframe (fiscal/monthly), (B) what is his/her total productive hours for the same period; and finally, (C) during the same timeframe how many hours he/she worked on the project. Then it's simply (A/B) x C.


So, that's the theory. Of course, the real life is always more complicated and varies on a case-by-case basis!

To ensure an effective technical implementation of the project and for more information on these typical mistakes and many other real-life tips, don’t miss your spot at our European Funding Academy in Vienna next February. It is a 4-day practical course covering the full lifecycle of EU projects: From proposal concept until the final report!


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