What Is Full-Time Equivalent? How to Calculate FTE

The ACA defines a full-time employee as someone who works 30 hours per week or 130 hours per month. If your company considers the number of hours for a full-time position as 40 hours per week, note that working 30 or more hours counts as 1 FTE for purposes of ACA compliance. This measurement unit was created due to the necessity to determine how many full-time employees are equivalent to working hours if an enterprise has both full and part-time workers. It is critical for accounting purposes and determining wages, and for calculating the company’s expenses when paying its workers. A full-time equivalent (FTE) is a unit of measurement used to figure out the number of full-time hours worked by all employees in a business. If your business considers 40 hours to be a full-time workweek, then an employee working 40 hours per week would have an FTE of 1.0.

• Let’s take an exampl e to understand how to calculate work hours in FTE.
• By tracking hours, the organization can flexibly adjust the workforce capacity to meet project deadlines and allocate resources efficiently.
• The FTE definition refers to the number of hours of work of a full-time employee.
• If you want to calculate FTE for a business that is only open for a few months of the year, you should first ascertain the total number of hours worked by all employees during the open months.
• When you use FTEs, it’s simple to measure how well you’re doing at work, especially if you have part-time employees.
• In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters.

To do this, multiply the number of weeks in a year with the number of hours for a full-time position. It is crucial to note that this method of computation assumes that the employee works 40 hours per week, 52 weeks per year; if the employee has any paid time off, holidays, etc., the calculation may differ. Increased brand awareness means that consumers are more familiar with and identify a brand. FTE (full-time equivalent) is a measure of how many full-time employees a company has or how many part-time employees work the same amount of hours as a full-time employee. For example, in some countries, labor laws define full-time and part-time employee classifications based on the number of hours worked.

Best Time Tracking Tools for Calculating and Monitoring FTE

Based on the clocked hours of previous similar projects, you can calculate budgets for the upcoming ones accurately. This blog entails an in-depth description of two different measures- FTE (Full-time equivalent) and Hours, that benefit specific industries and give you precise, useful insights into their KPIs. If you have at least 50 FTEs employees, you are an ALE for the year, which means you are subject to specific reporting requirements and share responsibilities under the ACA. The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision (ESRP) Estimator to help you determine FTEs and see if you qualify as an ALE. With Float, you can check the total leave balance for FTE or PTE employees using the time off policies feature. You can view the unused balance as a whole number or percentage for on-the-fly planning.

Clockify is a time tracker and timesheet app that lets you track work hours across projects. Marija Kojic is a productivity writer who’s always researching about various productivity techniques and time management tips in order to find the best ones to write about. She can often be found testing and writing about apps meant to enhance fte meaning the workflow of freelancers, remote workers, and regular employees. Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places. As evident, once you have the total number of hours per day, you’ll be able to pick whatever days/employees ratio you want to carry out the estimated workload.

The people-first HR software

FTE offers a systematic method to determine the requirement for upcoming projects and the number of hours needed to complete tasks. As a result, it is a very beneficial measurement tool for long-term business strategy. You can determine how many hours your project needs, and after calculating the equivalent EFT of that hour, you can hire the number of people the project requires to be completed. It refers to the number of hours worked by a single employee in a week. The annual FTE count is considered to be 2,080 hours, which breaks down into eight hours per day, five days a week. FTE is used to convert the hours worked by part-time employees into those worked by full-time employees.

• Gauging the resources’ availability, scheduling, and keeping track of their utilization is key to accurate resource management.
• For example, you’ll want more hands on deck in a restaurant during the busy holiday and summer seasons.
• For example, if an employee has an FTE of 0.80, multiplying that number by 40 means that an employee works 32 hours a week.
• She is passionate about economic development and is on the board of two non-profit organizations seeking to revitalize her former railroad town.
• Full-time equivalent (FTE) is calculated by dividing an employee’s scheduled hours by the company’s work scheduled hours on a weekly full-time basis.
• Additionally, FTE can benefit you in terms of making your work effort easier while calculating income, productivity, and profit per employee.

Float does the heavy lifting by calculating your resources based on their total available hours (for both FT and PT capacity). Several federal programs in the United States—such as the Paycheck Protection Program (PPP)—use FTE to determine employer eligibility. FTE is also used in the United States to determine whether an employer is an ALE (Applicable Large Employer) for the fiscal year. Finally, small business owners in the United States need this metric to see if they can apply for a tax credit in the amount of 50% of the employer-paid health care premiums.

Enterprise Workforce Planning (EWP)

It is a way of adding up the hours of full-time, part-time and various other types of employees into measurable ‘full-time’ units. To identify the FTE of part-time employees, divide the total hours worked by part-time employees by the annual hours worked by one full-time employee (i.e., 2,080 hours). Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year.

• Our part-time employee’s annual FTE salary would be 26,400 dollars and their weekly pay would be 507 dollars.
• FTE stands for full-time equivalent and measures how many full-time employees an organization has.
• Bear in mind that this is just the expected number of hours Olivia may work with a 0.7 FTE — she will likely use some of these hours for PTO.
• When you apply for a PPP loan, you will need to include your documents showing the number of full-time equivalent employees on your payroll.
• All you need to do is to go to your Project Planner and use the toggle to see your projects in FTEs.
• The FTE acronym stands for “full-time equivalent.” It is a unit, which shows the workload of a person, and whether they are considered full-time or part-time.

If a part-timer completes 10 hours a week, then four such part-timers will constitute one full-time employee. 0.5 FTE is the number of hours required for a part-time worker, approximately 20 hours per week. After all, the net costs of hiring additional part-time employees may in fact be lower than the more visible cost of overtime pay for existing staff, and FTE is used to uncover such findings. Moreover, having accurate FTEs for all employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs. Once you decide why you want to use FTE, identify the appropriate calculation method, and follow it through. With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.

FTE definition

Calculating headcount is as simple as adding up your employees, while FTE refers to the number of full-time hours being worked at the company. Let’s say that a full-time weekly schedule in your company is 40 hours per week, and your employees are scheduled with 40 hours of work a week. This is a straightforward example since each employee who works 40 hours per week in your company has a 1.0 FTE.

• Within this method, the employee is credited with 40 hours for each week when payment was due (including PTO).
• Let’s say that a full-time weekly schedule in your company is 40 hours per week, and your employees are scheduled with 40 hours of work a week.
• Any employee having at least 30 working hours per week (or 130 a month) is considered a full-time employee under this act.
• If your company considers the number of hours for a full-time position as 40 hours per week, note that working 30 or more hours counts as 1 FTE for purposes of ACA compliance.
• For example, a company might consider 40 hours a week, 52 weeks a year, as full-time.

If an employee works 40 hours a week, they count as one full-time employee or 1.0 FTE. Human resources often use the FTE metric to make staffing decisions for the entire company. Let’s say you need to calculate the total amount of hours, time, and money required for your business to run successfully. A full-time equivalent (FTE) — also known as a whole-time equivalent or WTE — represents the sum of all full-time hours employees work in a certain company. Along with counting the hours worked, FTEs show how many full-time employees a particular company employs within a fiscal year or needs to employ to carry out a project.