What Does FTE Stand For and How is Full Time Equivalent Calculated?

what is fte

Use our employment calculator to get an estimate of your overall costs for employees in different countries. Although most businesses consider 40 hours a week and 160 hours per month full-time employment, according to the IRS, 30 hours a week and 130 hours per month are enough. In some cases, employers consider 37.5 hours a full-time work week because they don’t include the 30-minute mandatory daily break. Let’s say you have two hires working 40 hours per week, three part-timers each working 20 hours per week, and two people with flexible schedules working an average of 15 hours per week.

In the past, if agencies were given a ceiling on the actual number of employed workers, which was reported on a given day of the year, the agency could employ more than this number for much of the year. Then, as the reporting deadline approached, employees could be let go to reduce the total number to the authorized ceiling on the reporting date. 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).

List all of your employees and hours worked

In most cases, full time equivalents measure an employee or student and/or their workload. A full-time employee who works 40 hours per week is equal to one FTE, and a part-time employee working 20 hours per week is equal to 0.5 FTE. When a business employs a significant number of part-time staff, it can be useful to convert their hours worked into full time equivalents, to see how many full-time staff they equate to. The FTE concept is used in a number of measurements that compare headcount to revenues, profits, or square footage. The concept is also useful for comparing headcount levels among the firms within an industry, as part of an industry analysis.

  • In one company, a full-time schedule may be 40 hours per week.
  • 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.
  • FTE calculations make project planning easier and more accurate because project managers know the actual capacity their team has, and the capacity required for a particular project.
  • This may boost demand for goods and services, increasing the number of full-time equivalent workers required to meet that demand.
  • The good news is that calculating FTE is pretty straightforward.

Performance information may have changed since the time of publication. Wrike Blog Latest news and best practices on project management. There are 2,080 working hours in the year, and the GHI Company staff works 22,880 hours during that year. When 2,080 working hours are divided into 22,880 hours, fte meaning the result is 11 FTEs. Off-Marketplace coverage is not eligible for the cost savings offered for coverage through the Marketplaces. It is important for businesses to know their FTE for internal management and workloads, salary negotiations and to stay in compliance with legal mandates.

How Horizons Can Help You Hire Full-Time Employees

The full time equivalent metric is calculated by companies to estimate the number of full-time employees employed within a specific time frame. A full-time employee who works the regular number of hours per week for their organization or industry is referred to as a 100% FTE (full-time equivalent). This is typically 40 hours per week, however it might vary based on the firm or industry. A 100% FTE is generally compared to part-time or reduced-hours employees, who are regarded less than 100% FTE.

What is the FTE means?

The calculation of full-time equivalent (FTE) is an employee's scheduled hours divided by the employer's hours for a full-time workweek. When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are 1.0 FTEs.

When you use FTEs, it’s simple to measure how well you’re doing at work, especially if you have part-time employees. You can contrast your staffing level with your competitors in your industry after converting part-time meters to FTEs. Additionally, FTE can benefit you in terms of making your work effort easier while calculating income, productivity, and profit per employee.

What Is the Difference Between FTE and Headcount?

You then divide the hours worked by one employee by the full-time hours in your organization to calculate the FTE. If you have both full-time and part-time employees in your company, you have to define how many FTEs you have in total. The 40-hour workweek calculation is applicable if you are doing the math for accounting and business purposes.

To claim PPP, you may need to keep a PPP chart for the scheme’s duration to show your employee retention. For example, you may have one staff member working 30 hours a week, another working 50 hours a week, and a third who worked 40 hours a week. Considering the average FTE or full-time working week is 40 hours, this means you have 3 full-time staff.

Calculating FTE for the Small Business Tax Credit

This is critical for organizations to understand since it affects workforce requirements, budgeting, and compliance with labor laws. Let’s say you have 100 employees, but 18 of those employees are part-time and only work 10 hours a week. Altogether, those 18 employees only account for the hours of four and half full-time employees. (82 full-time employees + 4.5 FTE for the part-time employees).