Declaring End-of-Contract Indemnities as Personnel Costs in Horizon Projects

Your employee who has been working on the Horizon project is now preparing to leave the company. You may wonder if the compensation costs associated with their departure can be declared as personnel costs and covered by the Grant. Sure, they can! Here we explain what can be charged to the project costs regarding end-of-contract indemnities.

Definition

To begin, it’s important to grasp the concept of end-of-contract indemnities, which include any financial compensations, or indemnity provided following the termination of a contract.

Criteria

With the concept defined, now let’s look at the requirements for end-of-contract indemnities to be considered eligible under HE:

1. End-of-contract indemnities apply only to employees that have an employment contract with the company.
2. The employment of the person needs to end during the project duration.
3. End-of-contract indemnities should be part of your usual remuneration practice or arise from the applicable national labour laws.

When?

Charge the eligible part of the indemnity in the reporting period in which the employee’s contract ends.

How?

If you comply with all the requirements mentioned above, we can move on to see how much of the indemnity can be charged to your HE project. It’s not exactly winning the lottery but depending on the time spent by the employee on the project, it can add up.

Step 1. Determine the amount of the indemnity that corresponds to the time worked by the person on the project. Note that this indemnity is often generated over a larger period than the project, hence you cannot charge the full amount. The simplest way is to calculate a pro-rata share of the indemnity amount based on the duration of time the individual worked on the project.

Step 2. Divide the amount of the indemnity by the maximum declarable day equivalents during the project. You will get the amount of the indemnity you can charge per working day.

Step 3. Multiply the indemnity amount per day by the number of days the person actually worked on the project.

Step 4. Once you calculate this number separately, add it to the employee’s personnel cost calculated as per HE rules (covered in this article).

Getting dizzy with the numbers? Do not hesitate to contact us at hello@getpolite.eu