What Is Full-Time Equivalent FTE?

define fte

In this case, you would still have a headcount of two, but your FTE would be 0.5. Headcount is often used to assess things like benefits and office space. FTE is more commonly used to calculate how many staff are needed to deliver a project. If the total is at least 50, the employer is an ALE and is required to offer health insurance to all qualifying employees. To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker.

Is FTE The Same As Full-time?

FTE refers to one full-time employee or the equivalent of a full-time employee.In general, full-time means an employee who works 40 hours per week, although this can vary depending on the organization. A full-time employee is equivalent to 100% FTE or 1.0 FTE.

Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes. That said, full-time equivalent is a metric used to determine the total number of full-time workers that you have in an entire organization. In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters. Some businesses list this information in their employee handbooks or offer letters. For example, a business might state, “Our standard work hours are Monday to Friday from 8 a.m. – 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours . To determine this amount, ask yourself, what do you expect a full-time employee to work in terms of hours per week?

Full Time Equivalent (FTE)

If a normal work week consists of 40 hours, an employee who works for 40 hours per week has an FTE of 1.0 while a part-time employee working only 20 hours per week has an FTE of 0.5. FTEs can help identify the number of full- and part-time workers an organization can hire, as well as the number of hours they should work.

define fte

The measure is often annualized to cover the average annual full-time equivalent students and is designated by the acronym AAFTE. For example, 1.0 is typically the FTE representation of an individual’s full work/school day, while 0.5 would indicate half of the original figure, generally fte meaning in reference to the workday. In reference to an individual, 0.5 usually refers to the fact that the worker renders less than a full day of work or the student attends less than a full day of classes. The ‘FTE salary per year’ box will automatically calculate the FTE salary.

FTE Calculation Examples

This metric provides a useful way to measure all of the hours worked by each type of employee thereby helping businesses organize their headcount more effectively. 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.

  • To calculate the full-time equivalent for the actual full-time employees, simply do a headcount.
  • The full-time equivalency measurement lets you calculate the hours those employees work compared to a full-time workload.
  • Once you decide why you want to use FTE, identify the appropriate calculation method, and follow it through.
  • The paycheck protection program or PPP is a scheme rolled out by the government to encourage companies to keep workers on their payroll.
  • This calculation provides a convenient way to quantify how many theoretically “whole” full-time employees are on the company payroll, even if the majority of your workforce is actually part time.

A single full-time employee could fulfill all 100 percent of this unit, or eight employees working five hours per week could. The same is true for a 0.5 unit — it can be made of one part-time employee working for 20 hours or four employees working five hours. It’s unlikely that you only employ full-time employees in your company — you likely receive help from part-time employees or temporary workers. The full-time equivalency measurement lets you calculate the hours those employees work compared to a full-time workload.

Why is FTE important for your company?

Depending on the type of work that is required, management can decide the number of full-time employees that are needed for a particular project and assign employees to those positions accordingly. The number of full-time equivalent employees is determined by dividing the total number of hours of service for which wages were paid by the employer to employees during the taxable year by 2,080. See 1.45R-2 and for permissible methods of calculating hours of https://www.bookstime.com/ service and the method for calculating the number of an employer’s FTEs. By determining your company’s FTE you get a better understanding of how effective and useful your workers are. Part-time workers are usually paid less than full-time employees and may not have access to the same benefits. On the other hand, a full-time equivalent is one or more employees whose work hours combine together to total at least 30 hours per week or 130 hours per month.

You’ll use all the information from each category to create and orchestrate strategic plans with clearer insight into your daily operations. Subtract all approved leave hours from the total number of each employee’s hours worked. Independent contractors are not the same as employees, and the U.S. government has strict standards to reduce how many companies misuse contractors as laborers without paying the appropriate taxes and benefits. FTE has a bunch of uses and different ways to calculate it depending on your situation. It’s a simple calculation to make and you just need to know your employee details and go from there. Knowing your accurate FTE will help determine responsibilities for employees. Let’s say you have an upcoming project and you need to determine all your costs.