What Is Full-Time Equivalent 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 (FTE) 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. An employee who works less than the standard hours (in your case 40 hours) is a part-time employee. First, let’s look at what full-time equivalent or FTE actually means.

Gives insight into organizational costs

This could be done monthly, quarterly, or annually, depending on the organization’s requirements. Contractors may or may not be included in FTE calculations, depending on their classification and the organization’s policies. Generally, contractors are not counted as FTEs unless they are considered equivalent to full-time employees. It represents a single full-time employee or multiple part-time employees whose hours add up to one full-time employee’s hours. For example, comparing the two groups over time allows an organization to find opportunities to improve efficiency when hiring seasonally or when making part-time and full-time staffing decisions. 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.

What does FTE mean in salary?

• Fear not, as we’ll reveal ways to bill a client accurately through a few easy steps.
• Having a comprehensive understanding of your workforce is absolutely essential as an HR professional.
• A single full-time employee represents an FTE of 1, while part-time employees have a 0.5 FTE (or half that of a full-time worker).
• Interns may or may not be included in Full Time Equivalent calculations, depending on their employment status and your organization’s policies.
• A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee.
• The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.

Simply put, full-time equivalent is the total number of hours worked by an employee to meet the requirement for full-time status. There are companies that have a significant number of people working part-time, i.e., workers who spend only a short time in the company. Workload balance is another important aspect of business efficiency. That’s where FTE comes in because you can use the FTE calculation to assign a certain number of employees fte meaning to departments within an organization, depending on each respective department’s work needs. By using the above example as a reference, and taking it step by step, you simply need to expand it to encompass your entire workforce, and you’re on track for an accurate look at your organization’s FTE. When using FTE alongside other performance metrics, it can be easier to understand per-employee costs and output in a large organization.

What does FTE 100% mean?

Various FTE formulas accommodate different timeframes and employee types. For weekly calculations, FTE equals total hours worked divided by standard weekly hours (e.g., https://www.bookstime.com/articles/absorption-costing 40 hours). Monthly FTE is total hours divided by standard monthly hours (e.g., 160 hours). Yearly FTE divides total hours by standard yearly hours (e.g., 2,080 hours).

Full-time employee (FTE) calculation

• FTE values that are greater than 1.0 represent a greater workload that goes beyond a single full-time employee, while values less than 1.0 represent part-time workloads.
• As you can see, the part-time employees are converted into the performance of a full-time employee.
• The calculation of full-time equivalent (FTE) is an employee’s scheduled hours divided by the employer’s hours for a full-time workweek.
• An employee with a regular budgeted assignment of 75% of a full-time job position has a 0.75 FTE.
• However, they took two weeks, or 80 hours, off in July for vacation and one week, or 40 hours, off in December for the holidays.
• FTE data also informs decisions related to staffing levels, budgeting, and resource allocation.

One qualification for this credit is that the business must have 25 or fewer FTEs. Multiply the total hours worked in a week by 52, the number of weeks in a year, to find the number of hours worked annually. 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 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. FTEs may also influence how many hours employees can accrue for PTO.

Example FTE Calculation

• 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.
• It combines their part-time workers’ hours to figure out how many full-time employees it would take to work those hours.
• Some may even assume any employees who work more than 20 hours a week to be 1 FTE.
• If you want your PPP loan to be completely forgiven, you need to keep the number of FTEs during the 24-week PPP period the same as it was prior to COVID-19.
• Part-time and seasonal workers contribute to FTE by calculating their hours worked as a proportion of full-time hours.

For instance, let’s say a full-time graphic designer working 40 hours per week makes $48,000 per year. A part-time graphic designer working 30 hours per week at that same company would have an FTE of 0.75 since they work 75% of that 40 hours. Headcount refers to the total number of people employed by your organization, including both full-time and part-time employees.

Expand business menu

FTE or full-time equivalent is a tool to help you gauge the potential productivity of your business or company. Regardless of the type of business you’re in, it’s important to keep an updated number of your employees and the hours they dedicate to their work duties. Employers can take these definitions — or lack thereof — and use them to inform their own.

Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year. To do this, multiply the number of weeks in a year with the number of hours for a full-time position. The calculation is straightforward — divide the employee’s scheduled hours by the number of hours that represent an official weekly full-time schedule in a company (e.g., 40 hours per week). Full-time equivalent, or FTE, measures the total amount of full-time employees working at any one organisation. 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. FTE is an important calculation for businesses that need to keep track of organizational costs, efficiency, overtime hours, work output, and the overall strain on certain departments.

What Is a 2-2-3 Work Schedule and How to Implement It?