Calculating payroll and indirect expenses for companies, the public sector and others
Calculate the rates for companies, the public sector and other entities that are not research organisations as indicated below.
Each of these companies/entities may calculate payroll and indirect expenses for their internal R&D personnel together as a stipulated hourly rate. The hourly rate is to cover payroll costs with additional overhead for social security costs and indirect expenses of relevance to the R&D participant’s activities in the project. The hourly rate for the individual participant is calculated on the basis of the agreed annual salary. The overhead for indirect costs must be substantiated by real costs entered into the entity’s accounts. The following rules apply for calculation of hourly rates:
- The hourly rate is determined on the basis of the agreed annual salary, with a calculation rate that corresponds to the entity’s actual indirect expenses.
- The hourly rate may not exceed NOK 1 100/hour.
- The number of Research Council-funded project hours per year for each individual may not exceed 1 850.
It is possible to use a common rate for groups of R&D personnel provided that variation in the salary levels within the group is small, and the indirect expenses are comparable. The general restrictions regarding calculation of hourly rates stated above will still apply. If you register multiple individuals with the same hourly rate, you must enter a comment about this on the page for Total costs.
As a general rule, sole proprietorships cannot be project managers or partners. Exceptions from this main rule will be given in the individual call. The owner of a sole proprietorship cannot have his own personnel and indirect costs covered. Sole proprietorships can be reimbursed for personnel and indirect costs to employees they may have, and other costs that they have when participating in a project, provided that these can be found in the sole proprietorship's accounts. Spouse can work in sole proprietorships, but can not be employed.
Example of calculation of hourly rate and overhead, please see the Norwegian site.
| A. Direct payroll costs | Employee costs | Units | Comments/description |
|---|---|---|---|
| 1. Nominal annual salary (11 months’ salary + holiday pay) | 800 000 | NOK | The nominal annual salary is the salary a (full-time) employee receives each year and that forms the basis for ordinary salary payments and tax deductions. The percentage of full-time is used to convert the actual salary to the nominal annual salary for employees who work part-time. |
| 2. Other payroll expenses and personnel-related costs | |||
| a. Pension contributions | 64 000 | NOK | Costs that are directly linked to the individual employee’s salary, depending on the company’s pension scheme. Calculated here as 8 % of the nominal annual salary. |
| b. Employer’s National Insurance contributions | 122 388 | NOK | Statutory contributions linked to the individual employee’s salary. The most common rate (14.1%) is used in the example. |
| c. Employee insurance | 4 000 | NOK | Occupational injury insurance and other relevant employee insurance. Here estimated at 0.5% of salary. |
| d. Welfare costs | 8 000 | NOK | Total costs divided between all employees. Here estimated at 1 % of the salary. |
| B. Indirect costs | These are actual costs that the enterprise spends on resources that are necessary to support the implementation of the project, but that are not specifically linked to project activities or project employees. To calculate indirect costs, start with the enterprise’s total costs for that cost category and the number of (full-time) employees these costs are divided between. In the event of an audit, the enterprise must be able to present documentation that total costs corresponding to (employee cost * number of employees) have been recognised under the cost category. If it is not natural to divide the cost category between all employees (or all employees in a more limited group, e.g. an R&D department), it must be considered whether this is a project cost at all, or whether the cost must be deemed to be a direct project cost and should therefore be reported under ‘Other operating expenses’. | ||
| f. Share of rent and electricity, offices/work premises | 60 000 | NOK | Estimate: The total cost for this cost category is normally divided equally per full-time equivalent, unless there are big differences between departments or groups of employees. |
| g. PCs, mobiles, data and office equipment | 30 000 | NOK | Estimate – can vary between groups of personnel based on different needs for work tools. |
| h. Administrative support functions: HR, HSE, accounts, auditing | 40 000 | NOK | Estimated here to be 5 % of salary |
| i. Special infrastructure costs | - | NOK | For example costs relating to labs etc., but not equipment, services etc. that are ‘ordered’ or directly triggered by the project. This cost category is only relevant in exceptional cases. Therefore, no amount is estimated here. |
| Total payroll costs, non-wage labour costs and indirect costs per full-time employee (with pertaining overhead rate) | 1 128 388 | NOK | |
| Number of hours of a (net) full-time equivalent for calculating the hourly rate | 1 695 | hours | The hourly rate is calculated by dividing the total costs by the number of hours worked by a typical full-time equivalent. For an employee who works 37.5 hours per week and has 5 weeks holiday a year, a net full-time equivalent will be around 1,695 hours. An upper limit of NOK 1,850 has been set for what an enterprise can enter as expenses for one and the same person in a project funded by the Research Council, i.e. around 10% more than a ‘normal’ full-time equivalent. |
| Hourly rate based on a full-time equivalent (1,695 hours) | 666 | NOK | The hourly rate can be used for all employees with a nominal annual salary as in the example, or, if relevant, for a group where the salary varies little from this amount (e.g. +/- 5%). The Research Council has set an upper limit on hourly rates (currently NOK 1,100). |
| Calculation factor = Hourly rate/salary (full-time equivalent = 1,695 hours) | 0,83 | ‰ | For project personnel with roughly the same salary (e.g. +/- 10%), the same calculation factor can be used provided that the calculation is carried out on the basis of the average salary of the group. |
| Alternative full-time equivalent as basis for calculation | 1 600 | hours | Sickness absence, contractual time set aside for self-development etc. can justify distributing the full-time equivalent costs between a somewhat lower number of hours than a full-time equivalent (1,695 hours). An alternative number of hours must be substantiated on the basis of relevant key figures, e.g. the scope of sickness absence, contractual further education activities etc. In the example, 1,600 hours is used as such an alternative number of hours. |
| Pertaining hourly rate when using alternative full-time equivalent | 705 | NOK | The same conditions as mentioned under Hourly rate above |
| Pertaining calculation factor = Hourly rate/salary | 0,88 | ‰ | The same conditions as mentioned under Calculation factor above |
Messages at time of print 28 April 2024, 08:06 CEST