What is Full Time Equivalent FTE? Formula + Calculator

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. 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. 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). – this is the number of working hours spent by 5 full-time employees per working week.

Calculating FTEs will also determine an employer’s duties under the shared responsibility provisions of the Affordable Care Act. For example, a project that is estimated to take 600 hours of work can be accomplished in a variety of ways depending on your allocation of staff and time requirements. In this article, we will explore the meaning of FTE from a U.S. perspective, how it is calculated and the purposes of doing so as an employer. Using the same formula, the number of part-time hours worked amounts to 5,000 hours per year.

How to convert FTEs to work hours? (+ FTE hours requirements)

It will help you plan a project or your work according to deadlines and your budget. Full Time Equipment is based on the total number of hours worked, and not the number of people employed by an organization. This distinction is needed because a 40-hour work week is common, yet it is not universal. At some companies and in some countries, a 36-hour work week is also a viable option so for them, 36 hours of work equal 100% or 1.0 FTE. FTE  refers to one full-time employee or the equivalent of a full-time employee. To qualify for PPP loan forgiveness an organization must have maintained the same level of FTE employees during certain specified time periods following the loan disbursement.

• In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards.
• To see your employees’ FTEs, you can view their daily/weekly/monthly assignments in Clockify.
• Employers can use FTE to evaluate their hiring capacity and current payroll, as well as for reporting purposes related to labor laws and employee benefit programs.
• Simply put, hours FTE is a standardized measure to calculate project hours and staff count.

A company may have the policy that only employees working 0.75 FTE and higher receive paid vacation days or a longer lunch break. However, that doesn’t always accurately depict the workload a company can carry. Remember to deduct any allotted holidays, vacation and sick days from the total number of hours working in a year. For our examples, we are allotting four weeks total time off a year, bringing the number of working weeks down from 52 to 48. It can also do the same for a full-time employee who hasn’t completed a whole year of work yet.

How Horizons Can Help You Hire Full-Time Employees

In this case, you can use this calculation method as a general guide but should also consider the possible limitations. In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees. 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. Suppose a company currently has 50 full-time employees on its payroll, along with 10 part-time employees. First, it is necessary to determine the number of hours worked by part-time employees. Five of them work full-time (40 hours per week), three occupy a part-time position each working 20 hours a week, and the other two each work 10 hours per week.

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. Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total. Wobbly will help every project manager not only to calculate FTE easily but to plan resources, make weekly/monthly reports, send invoices for clients, etc. It makes the life of every project manager easier by avoiding tons of manual work.

How Do You Calculate Full-Time Equivalents?

This Australian-based MNC has a global presence across 50 countries and has helped 100+ clients meet their specific business goals. Saviom also provides tools for project portfolio management, professional service automation, and workforce planning software. So, SAVIOM can help your business to establish an efficient system geared towards your specific business challenges. Nowadays, companies are aligning towards the FTE model as opposed to the headcount for many reasons. For one, headcount does not take into account the number of part-timers in a firm. For two, it focuses on the overall organizational strategy and filling roles in general but does not drill down to closing the specific skill gaps.

It could require 15 full-time employees (600 hours/40 hours) five days to complete, 30 part-time employees five days to complete, one full-time employee 15 weeks to complete, or a combination of these. This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. The part-time employees, on the other hand, work 20 hours per week and 25 weeks out of the year. The full time equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee. The expected length of a full-time schedule has changed a lot throughout history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century.

The role of FTEs in determining whether an employee qualifies as an ALE

Your FTE employee is someone who works the entire workweek and his total working amount of hours are 2,800 hours per year, breaking down to 5 days a week, 8 hours per day. Although in some cases, employees consider 37,5 hours a full-time work week, because they don’t include the 30 min mandatory daily break in the total amount. Full-Time Employees generally work more than 4 days or 30 hours a week and are permanently employed, as opposed to being temporary or seasonal.

For a business to manage their business efficiently, they need to know they have enough manpower to carry out the work. If you’re expanding your company or seeking out-of-country talent, there are certain requirements you must follow for a successful partnership. You can repeat this formula weekly, monthly, quarterly, or annually for more specific insights. Outside of the business environment, FTE is also used to measure a student’s class load or involvement in a school project… It seems like we never leave school behind. Match your resources to your future needs to see your business grow. How do you know whether your project schedule is ahead or behind?

What Is an FTE Employee?

Instead, it focuses on the number of people working on your projects, whether they are full time employees, part time employees, contractors, interns, students, freelancers, advisors, etc. If an organization considers full-time to be a 40-hour working week then one full-time employee will count as 100% FTE. 100% FTE can also be achieved https://www.bookstime.com/articles/certified-bookkeeper in several other ways, for example, through two part-time employees (who each work 20 hours per week) or four employees who work 10 hours per week. The total hours worked is the sum of the number of hours worked by part-time and full-time employees, whereas the number of available full-time hours in a year is most frequently 2,080.

Identifying which employees are FTEs is essential for a number of reasons ranging from workforce planning to adhere to employment laws under the Affordable Care Act. Read our employer’s guide to find out more about how to hire employees in Europe, Asia, Africa, or elsewhere. FTE calculations are also important when determining eligibility for certain federal programs and benefits. The 109,000 total hours worked must be divided by the total number of available work hours in a year, or 2,080 hours. Employers can use FTE to evaluate their hiring capacity and current payroll, as well as for reporting purposes related to labor laws and employee benefit programs. FTE has several different uses and several different calculation methods, depending on why you want to calculate it.

Employee Assumptions

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. You can also use an FTE calculation to determine the appropriate pay for part-time workers. To identify the FTE for a specific part-time position, just divide the number of hours worked by the employee by the number of hours considered for a full-time worker.

Each part-time employee counts as a fraction of one FTE based on how many hours they work on average. ALEs are required to offer affordable health coverage of minimum value to all full-time employees and their eligible dependents. One whole FTE unit is 1.0, which can be made up of a single person or multiple employees.