Guidance

080/22 To provide clarity to Grant Recipients when claiming procured Direct Staff Costs and the application of Flat Rate Indirect Costs (FRIC).

Updated 29 February 2024

Date Issued	10/05/2022
Review Date	31/12/2023

1. Who should read

All European Social Fund (ESF) beneficiary organisations (Direct Bid Grant Recipients and Co-Financing Organisations), the Greater London Authority and other Intermediate Bodies.

2. Purpose

Following advice from the European Commission (EC), this Action Note is to provide further clarity on claiming staff costs for staff who are not directly employed by the organisation of the Grant Recipient or their Delivery Partner(s).

3. Background

Procured staff costs must be in line with the ESIF National Procurement Requirements published on GOV.UK. The procurement exercise will be subject to Managing Authority review.

Appropriately procured staff can be claimed as Direct Staff Costs, subject to the contract and or invoice requirement set out below.

Where GRs are claiming procured Direct Staff Costs, these external staff costs should be clearly identified as staffing costs in the contract and/or invoice of the service provider and be separate to any other costs on the invoice and or contract.

If the external staff cost is not identifiable as a distinct cost category, then this external staff cost cannot be claimed as Direct Staff Costs and should be claimed as Other Direct Costs.

For example:

Invoice received totalling £150.00: £50.00 trainer delivery time (staff costs) £100.00 training materials

In this example the £50.00 trainer delivery time can be claimed as procured Direct Staff Costs.

The £100.00 training materials can be claimed as Other Direct Costs (as long as the project is a 15% FRIC project and allows ‘Other Direct Costs’ in the granular budget).

The £50.00 Direct Staff Costs may or may not attract Flat Rate Indirect Costs (FRIC) dependant on whether the trainer is based within premises owned or rented by the GR or DP as detailed below.

If the procured external staff costs are not clearly identified as a separate cost heading, as set out in the example above they cannot be claimed as Direct Staff Costs.

Where GRs are procuring staff solely to deliver on their project, the procured staff do not have to comply with the 1720 calculation.

The procured contract and subsequent invoice would form the basis of the cost to the project. As long as the procurement complies with ESIF requirements, the MA would not expect projects to then seek to ‘calculate’ any pro rata costs through the use of 1720 calculation. The invoice for that month and or quarter would be the actual cost. The procured staff would need to be listed on the organogram and would have to have a contract which the MA would check the procurement for. There is no requirement for a HR letter or Job Description because the duties should be listed in the contract. The MA would need to see evidence of the defrayal of the invoice.

3.1 Flat Rate Indirect Costs

• for procured Direct Staff Costs, GRs should ensure they have applied FRIC correctly as follows:
• where procured staff are based in and or delivering from premises owned or rented by the GR or Delivery Partner, these Direct Staff Costs will attract FRIC

Where procured staff are not based in and or delivering from premises owned or rented by the GR or Delivery Partner, these Direct Staff Costs will not attract FRIC. Therefore, although these are Direct Staff Costs, they will not attract FRIC and column ‘S’ - Eligible Flat rate Indirect Costs of the Transaction List (TL) should have ‘N’ recorded.

The relevant procurement ID will also need to be recorded on the TL.

4. Action

ESF projects are asked to note the contents of this Action Note where they are claiming for procured Direct Staff Costs.

5. Contact

If you have any queries about this Action Note please email esf.deliveryteamquality-mi@dwp.gov.uk