The wording in component 11 of the schedule of cost components is designed to accommodate different time recording systems you may operate and different ways you may account for chargeable and non-chargeable time.
The expectation is that, in most cases, your time-recording system will record all time that any employee is paid for by you. This will include holidays, sickness, training and the like. You can only recover the cost for the proportion of time actually incurred in providing the service to the client.
In your example, you would divide the person’s pay and benefits by 260 days and multiply it by 220 days to determine your person’s defined cost under cost component 11. Anything else needs to be included in components 12 (contract-related expenses), 13 (sub-consultants), 3 (overhead) or the fee.
Component 3 includes for a charge for all support people and office overhead costs, together with the provision of accommodation, equipment, supplies and services. This is calculated by applying the overhead percentage stated in the contract data to the total of people components 11, 12 and 13. Your fee percentage would then be applied to the sum of that calculation.
Note too that if your time recording system is based on hours, the hours for each person claimed per day has to reflect the contracted hours in the person’s contract of employment. So, to claim 8 hours per day for 5 days per week, the person would have to be contracted to work 40 hours per week.