What Is Full-Time Equivalent FTE and How to Calculate It?

To be able to calculate the total FTE in your company, you need to determine the FTE of your part-time workers first. To do that, you need to divide the total number of hours worked by your part-time employees by the total number of annual hours worked by 1 full-time employee. HR departments often use FTE salaries to determine their part-time workers’ compensation. A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee.

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In practice, FTE is measured by companies to estimate the number of full-time employees employed within a specific time frame. It’s up to HR to determine which metrics will most help to leverage the headcount metric. Too often, HR will look at headcount metrics or other metrics in isolation rather than determining what these metrics mean from a business perspective. Linking performance with business outcomes in headcount reports will provide real value to business leaders and help you meet organizational goals.

By understanding the FTE of their workforce, businesses can ensure that they are meeting their obligations under labour laws. For example, businesses may need to provide certain benefits to employees depending on their FTE. By adding the full-time and part-time hours worked, we can calculate the total number of hours worked by all employees for the year as 109,000. FTE, an abbreviation for “full time equivalent”, counts the approximate number of full-time employees employed by a specific company, but with the inclusion of part-time employees.

How to calculate an FTE?

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. Integrating FTE into budgeting and financial planning processes is a strategic approach that aids in the precise allocation of resources and enhances decision-making for businesses. This calculation reveals not just the number of employees but the extent of their contribution in hours worked, thereby providing a clear picture of the actual workforce size. FTE stands for “full-time equivalent,” and is used to measure the number of employees working for a company. For example, if a company has 10 employees working full-time, and 10 employees working part-time, the company would have 20 FTEs. Employee productivity can be measured to determine how much each full-time equivalent generates for the business.

Whether an FTE of 0.75 is considered full-time will depend on the company policy made by the employer. According to the US Bureau of Labor Statistics’s newest data from March 2024, private-sector US employees (excluding the farm sector) work 34.4 hours per week on average. The Paycheck Protection Program (PPP) provides funds for small business owners to help them cover up to 24 weeks of payroll or other costs such as utilities, rent, etc. fte full form in company First and foremost, make a list of all your employees within an organization.

Bonus FTE calculators

This rate is known as the affordability threshold and is typically adjusted every year to account for changes in market conditions, healthcare premium growth, and the American economy. Another important factor to consider when looking at FTEs is the cost per FTE. This is a measure of the cost of an individual or team’s work relative to their productivity.

But when you combine headcount with metrics like these, you can calculate other metrics, including FTE, employee turnover, and retention rates. These metrics help HR understand the development of their workforce and the steps needed to achieve optimal productivity and performance. Headcount reporting can also help you determine the TCOW (total cost of workforce) and revenue per employee, allowing you to weigh the financial impact of the number of employees on the business. While headcount tells you the number of employees you have, FTE shows how many full-time equivalent employees are employed each year.

The FTE measure also helps to understand the scalability of a provider’s teams. FTEs are typically measured on a per-project basis, which means that a provider’s FTE can increase or decrease depending on the size of the project. This is important to consider when looking at providers and determining whether they can scale up or down in response to changing business needs.

Step #1: List your employees

The list should contain the names of your employees as well as the full number of work hours for a single week. Try to include employee leave (both paid and unpaid) in the overall number of work hours to make your results more accurate. It’s used to determine the overall number of full-time hours that your team or business as a whole is able to perform or has performed during a certain period of time. Certain workers are not considered employees for the purposes of calculating an FTE employee, such as the owner of a sole proprietorship or large shareholders of a corporation.

1. Often overlooked, FTE provides value-added perspectives into staffing levels, budgeting, and overall workforce planning.
2. In general terms, full-time equivalent (or FTE) is a unit of measure that plays an important role in calculations used in businesses, project management, or federal programs for eligibility purposes.
3. The part-time employees, on the other hand, work 20 hours per week and 25 weeks out of the year.
4. Plan the right people at the right times and save valuable time and money in your store.

Once you have determined the number of hours an employee is expected to work and the number of hours an employee works, you can calculate the FTE hours. To do this, divide the number of hours an employee works by the number of hours an employee is expected to work. Once you have determined the number of hours an employee is expected to work, the next step is to determine the number of hours an employee works. This number will be different from the expected number depending on the hours worked and the amount of overtime an employee may have. The key difference between headcount vs. FTE is that headcount tells you how many people are currently employed in your organization. Meanwhile, FTE tells you how many full-time hours are being collectively worked.

1. For example, if a full-time job is 40 hours per week, and you have only two employees working 20 hours per week, your company has a 1.0 FTE.
2. Under the Affordable Care Act (ACA), one FTE is a combination of employees who aren’t full-time, but whose joint hours are the same as a full-time employee (at least 30 each week or 130 each month).
3. By calculating your FTE, you’ll be able to get information on the overall productivity of all your employees (within a team, department, or entire company).
4. The result is the FTE value, which might range from 0 (for someone who hasn’t worked at all) to 1 (equivalent to a full-time employee).
5. This calculation reveals that, while the company has five employees, their total workload is equivalent to 4.25 full-time employees.
6. Make it easier for production and supply staff to communicate their availability and time off with our software.
7. While headcount planning can help HR work with managers and business leaders to build and scale the organization’s workforce, it does have some limitations.

You’ll find the answers to all these questions and more and learn how to calculate FTE step-by-step. Those portions specifically cover an organization’s shared responsibility  for offering affordable coverage and the information it must report to the IRS every year regarding that coverage. Finally, let’s see how FTE relates to employment status, along with some legal and compliance considerations.

Headcount is the total number of employees, while FTE is the equivalent number of full-time employees needed to perform the same amount of work. FTE takes into account the hours worked by part-time and contract employees, providing a more accurate representation of the organisation’s labour costs and workload distribution. In addition to tracking the total number of full-time employees, 100% FTE is also used to measure the total number of hours that are worked in an organisation. This is done by taking the total number of hours worked and dividing it by the total number of full-time equivalent positions. 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 (which makes them full-time employees). This is a straightforward example since each employee who works 40 hours per week in your company has a 1.0 FTE.