It is the hours worked weekly for teachers, while for students, it concerns enrollment. On the other hand, FTE is used for complex and intensive projects that may require different or reinvented frameworks, methodology,, and processes. These tasks will demand more focus and commitment, and hence, full-time employees are best placed to provide the solutions. The FTE also provides real-time data to managers and allows decision-makers to stay compliant with the rules. In addition, it helps firms manage their costs, make budgeting provisions and comply with regulations. For example, if a company has over 50 FTEs, it will be obliged to provide health insurance. Another advantage of FTE is that it also gives an idea of the company’s size.

• It comes in the form of a tax credit worth half of employee wages over the course of a covered period.
• However, when filling positions, these factors are excluded from calculating worked hours.
• For example, if a company requires employees to work at least 35 hours per week, they would be considered full-time.
• The method for calculating FTE is slightly different for each of these uses.

By comparing that figure with industry averages the company can analyze its current productivity. You can then determine the equivalent number of full-time workers you employ. Full-time employees usually work 40 hours each week for over 120 days a year, but it also includes anyone who works more than 30 hours weekly. Add all of the hours from full-time workers together to use for your calculation. Employees who worked less than 40 hours per week on average during a specific calculation period will have their average hours worked on a weekly basis added together. Divide this total number with 40, and then round the total to the nearest tenth to get the total FTE.

List all of your employees and hours worked

No employee can be greater than 1.0 FTE, as overtime is not counted for this calculation. Small businesses are eligible for small-employer health care tax credit — they apply to employers who employ less than 50 full-time equivalent employees. For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to. You can also use an FTE calculation to determine the appropriate pay for part-time workers.

In contrast, a part-time employee working only 20 hours per week would have an FTE of 0.5—which shows that their hours worked are equivalent to half of a full-time employee. The full-time employees work 40 hours per week and 52 weeks out of the year, meaning that the number of full-time hours worked on an annualized basis is 104,000 hours. To calculate FTE, identify the total number of hours worked by part-time employees during a particular time period. Then, calculate the total number of hours worked by full-time employees for that same time period. Add the hours worked by full-time and part-time employees together, then divide that number by the total hours worked by full-time employees to determine the FTE for that particular period. All the above-mentioned factors end up costing the company something and affecting its bottom line. You can also calculate a full-time equivalent for both hours and salary.

Full Time Equivalent (FTE)

Full-time equivalent enables managers to compare productivity between full and part-time workers, identify areas for improvement, and plan resources effectively depending on the project or the seasonality of work. The list should include the employee’s name and the number of hours they work per week. Make sure to exclude time allotted for paid leave and sick leave. Do not include 1099 contractors; they are not considered employees. Some businesses list this information in their employee handbooks or offer letters.

First, let’s look at what full-time equivalent or FTE actually means. The full time equivalent, often abbreviated as FTE is an indicator that reflects an employee’s productive capacity. full time equivalent An FTE of 1.0, for example, corresponds to the hours worked in a day for a full-time employee. Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5.

Section 1 of 3:What is FTE?

The term “full-time equivalent” is often used to calculate government employees. However, the number of FTEs in a government agency will depend on the project’s requirements that are being carried out, its timeframe, and budget allocations or restrictions. A full-time worker is generally in a more advantageous position when compared to a fixed-term contractor. A contractor doesn’t enjoy the benefits of a permanent employee such as a bonus or company’s subsidies and discounts. Full-time equivalent , also called whole time equivalent , is a statistical measure that counts the number of hours that a full-time employee works. A method of calculating labor costs where the number of employees is multiplied by the rate and duration to calculate cost. Information provided on Forbes Advisor is for educational purposes only.

Some labor laws and employee benefit programs are linked to how many employees a company has on its payroll. To ensure that a company with 100 part-time employees is treated as fairly as one with 50 full-time employees, an FTE is calculated to compare both workforces. Now determine the number of hours worked by full-time employees over a given period. Full-time employees are those who work a minimum of 30 and a maximum of 40 hours a week and more than 120 days a year. To get FTE for the year, divide the total annual hours worked by 2080, which assumes a 40-hour workweek for 52 weeks of the year. To calculate for the month, divide by 173.33, which is equivalent to 2080 hours divided by 12 months.