SU (SelviaUtama): December 2014

Compiling the documents

The cost of staff assigned to the Action, corresponding to actual gross salaries including social security charges and other remuneration-related costs; salaries and costs shall not exceed those normally borne by the Beneficiary(ies), unless it is justified by showing that it is essential to carry out the Action;

- Staff costs are eligible provided that the staff are essential to the implementation of the Action and are explicitly mentioned in the project proposal.

- The eligible costs are constituted by gross salaries or wages in respect of the actual time devoted to the project and include income taxes, social security etc., and other statutory costs included in the remuneration, provided they are standard Human Resources policy of the Beneficiary and can be proved by supporting documents of the Beneficiary (or Affiliated Entity). For example, medical insurance, repatriation, relocation, visa costs, housing allowance, salary adjustments, other benefits etc. may only be eligible if they respect all applicable legislation, constitute a standard practice of the organization and are actually paid.

- As a general rule "Provisions" in the Beneficiary's accounting cannot be considered as actual costs, but some exceptions can be agreed on a case-by-case basis where they constitute an obligation under applicable law and a certain future disbursement. (refer to Art. 14.1 a) ii) for the requirement of costs not yet paid at the submission of the final report)

- They should be traceable to supporting schedules (number and names of staff, part-time / full time indication), to payroll records (e.g. salary slips), and to Human Resources records (e.g. employment contracts). NB: A pro-rata system based on estimations cannot be used to justify direct costs, since such a system would not represent real cost (but only estimation). For example it may be accepted that a country director works 20% on a contract if supported by timesheets, justifying that he actually worked those hours or days on this project. The time worked and the costs linked to it represent closely the reality. However, it cannot be accepted that a country director's working time is divided equally on a pro-rata basis on 5 different projects, based on the assumption that he spends equal time on all projects - because such an assumption does not necessarily reflect reality. Refer to Art. 14.7 for more information on “Shared costs”.

HQ staff
As a general rule, costs of HQ staff should be covered by indirect costs.
However, with due consideration to the description and the functional organisation of the Action and of the Beneficiary(ies), they may be charged as direct costs in the following circumstances:

- They relate to the achievement of the Action's operational results and have accordingly been identified as an operational activity in the description of the Action.

- They cover the actual presence of HQ staff in the field (e.g. specific monitoring missions, needs assessment, etc). This means that a simple % is not acceptable, a specific pro-rata related to the actual days/months of mission in the field has to be demonstrated.
They must be well justified in the framework of the Action and accepted by the Contracting Authority.
In all other cases, the related HQ staff costs cannot be charged to the Action as direct costs either in whole or on a pro rata basis, calculated for instance on the basis of the time the HQ staff spent on the concerned activities.

Consultants (v. Employees)
As a general rule, tasks performed by consultants, experts and/or other service providers (e.g. accountants, lawyers, translators, external IT staff, etc…) are to be considered as resulting from implementation contracts (Art.10 General Conditions). Consequently, Beneficiaries of grants must award the contract to the tender offering best value for money, that is to say, to the tender offering the best price/quality ratio, while taking care to avoid any conflict of interests, i.e. in accordance with Annex IV.
These costs are thus not considered as human resources (budget heading 1) but as other costs/services (notably budget heading 5 or 6)

Specific case: "in-house consultants":
In house/”intra muros” consultants are natural persons working on the basis of a service contract as opposed to employees hired on the basis of a labour contract. They join the Beneficiary's(ies') project team and deliver 'external services'. The costs arising from these in-house consultants are in principle to be considered as costs relevant to implementing contracts.
However, as an exception to the rule, these costs may be considered as personnel costs regardless of whether the consultants are self-employed or employed by a third party, if the following cumulative conditions are fulfilled in accordance with the terms of the call for proposals and subject to the eligibility of costs:

(a) the Beneficiary(ies) has a contract to engage the consultant to work for it and (some of) that work involves tasks to be carried out under the project funded by the grant;

(b) the consultant must work under the instructions/supervision of the Beneficiary(ies);

(c) the consultant must work in the premises of the Beneficiary(ies) as a member of the project team;

(d) the output of the work belongs to the Beneficiary(ies);

(e) the costs of employing the consultant are reasonable, are in accordance with the normal practices of the Beneficiary(ies) and are not significantly different from the personnel costs of employees of the same category working under a labour law contract for the Beneficiary(ies);

(f) travel and subsistence costs related to such consultants' participation in project meetings or other travel relating to the project is directly paid by the Beneficiary or in any case according to the Beneficiary's own staff procedures.

(g) the consultant uses the Beneficiary's(ies) infrastructure (i.e. user of the 'indirect costs').

These conditions describe a de facto situation of subordination, as in a traditional labour contract (regardless of the legal form). Therefore in these cases, if the national applicable legislation allows for a de facto employee to be hired under a service contract, and provided that all the conditions stated above (similar costs, property of results, subordination, etc ) are satisfied, these service contract may be assimilated to staff costs in the budget and for all useful purposes (for instance procurement rules set out in Annex IV would not apply).

This is to be evaluated by the Contracting Authority on a case by case basis, so it is strongly suggested to discuss it as soon as possible with the Contracting Authority to avoid any problems.
Note also that if these conditions are not met, a service contract may still be awarded through the applicable procurement procedures.
Unless otherwise specified in the Guidelines for Applicants, service contracts meeting these criteria may be charged to heading 1.Human Resources.

Payroll for nonprofits is a complex issue. Certain rules and exceptions apply that are different than what applies to for-profit payrolls. As if that complication isn’t bad enough, many nonprofits seem bound and determined to create their own rules and exceptions that are categorically incorrect.

In addition to those things, other considerations should be made to focus on two big issues: 1) payroll classification and, 2) types of payments.

Payroll classification. This is a biggie…and it gets asked about by clients on a weekly basis. That is, “Should I pay my staffers as employees or independent contractors?” 95% of the time, the answer is employee, regardless of any other extraneous information that gets tossed into the mix. It is a widely-held belief that an employer has the choice under which status to pay its workers. The most common justification is the savings the NPO will experience if it doesn’t have to cover payroll taxes. The problem is, it’s not your choice. Even if your staffer agrees to be treated as a contractor, it is still contrary to IRS and state regs. The IRS, in determining whether or not a worker is a contractor or employee, looks at several factors. They are:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Type of payment. By type of payment, we mean things like straight salary or wages versus bonuses and commission. The IRS calls the latter non-linear compensation…and it isn’t too fond of it in a 501(c)(3) setting. For-profit organizations can do this all day long. But for nonprofits, the IRS considers this an open door to unreasonable compensation. For example, Charity, Inc. hires two employees who will be in charge of managing fundraisers. They will be paid a small base salary, plus a percentage of the money raised at the event. Sounds reasonable, but the IRS says, “No…not reasonable!” Employees should be paid according to the job description of the position. Not only is non-linear compensation usually unreasonable by IRS standards, it also opens the door to potential fraud, or at least improper conduct, as the employees have everything to gain by pushing the limits on fundraising.

Real Story and answer:

I would be interested in creating with some colleagues a FET Young Explorers project, in which I would be Work Package leader. I've been involved in several european projects, but always as a postdoc recruited by a PI (or WP leader), and I don't have a permanent position yet. So basically, the idea of applying to this project would be to get my full salary paid by the EU project, but I don't know if it's possible.

Indeed, in the FAQ, they say that the applicants need to have a position somewhere. I don't think getting a position would be a problem, but only if I come with my own salary. The question in this case is whether the hosting institution still needs to pay some part of my salary?

EDIT: A precision on the question. From the Guide for Applicants, Section A3/Budget, p. 47, the part about the requested European Commission contribution:

The requested EC contribution shall be determined by applying the upper funding limits indicated below, per activity and per participant to the costs accepted by the Commission, or to the flat rates or lump sums. Maximum reimbursement rates of eligible costs

Research and technological development = 50% or 75%*

Demonstration activities = 50%

Other activities (including management) = 100%

(*) For participants that are non profit public bodies, secondary and higher education establishments, research organisations and SMEs.

So, if the salary of a researcher is included in the Research and Technological development, then does that mean that it's possible to only ask for 75% of it to the EC? (assuming the researcher is employed by a university).

But I think the other thing is that most likely a temporary worker can get a full-time salary from an EU-level grant, but a permanent employee cannot.

Development and Cooperation - Europeaid

Foundation Group

Academia

SU (SelviaUtama)

The Introduction: Corporate Finance

EU Project: Eligible Salary Cost

(b) the consultant must work under the instructions/supervision of the Beneficiary(ies);

(c) the consultant must work in the premises of the Beneficiary(ies) as a member of the project team;

(d) the output of the work belongs to the Beneficiary(ies);

The Introduction: Corporate Finance

EU Project: Eligible Salary Cost

(b) the consultant must work under the instructions/supervision of the Beneficiary(ies); (c) the consultant must work in the premises of the Beneficiary(ies) as a member of the project team; (d) the output of the work belongs to the Beneficiary(ies);

(b) the consultant must work under the instructions/supervision of the Beneficiary(ies);

(c) the consultant must work in the premises of the Beneficiary(ies) as a member of the project team;

(d) the output of the work belongs to the Beneficiary(ies);