Full-time equivalent is a metric to determine the total number of full-time hours completed by a full- or part-time employee. This metric can help companies in project management and federal programs, among other things. Usually, companies can calculate FTE with some straightforward steps.

First, it is necessary to determine the number of hours worked by part-time employees. As you can see, the part-time employees are converted into the performance of a full-time employee. So the FTE is not the number of employees in a company, but the equivalent of a full-time employee. Because the number of employees says nothing about a company’s actual work performance. Five of them work full-time , three occupy a part-time position each working 20 hours a week, and the other two each work 10 hours per week.

Why Calculate the Full Time Equivalent?

The FTE employee doesn’t have to actually exist, and can be a combination of part-time employees. For example, if your entire staff works part-time, the FTE employee is a hypothetical full-time worker by which your part-time workers are measured. This is where the concept of the full-time equivalent employee comes in. This is done by counting somebody who works half as much as a full time equivalent full-time employee as half an employee, and so on. It might sound cold, but it’s a vital metric when companies are applying for government loans, and when determining whether the company is large enough to have to follow certain laws. Full-time equivalent is calculated by dividing an employee’s scheduled hours by the company’s work scheduled hours on a weekly full-time basis.

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Full-Time Equivalent: Definition, Uses & Example

Standard FTE assumes that typical employees work 40-hour workweeks, five days a week, and eight hours a day. Since there are 52 weeks per year, this equates to an average full-time employee having the opportunity to work a total of 2,080 hours. This number doesn’t reflect sick leave, paid time off, seasonal assistance, or paid overtime. It also doesn’t give you any insight into how those numbers break down across departments and individuals. (For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting). Full time equivalents measure how many employees are needed or used assuming that all employees work a full time schedule. FTEs are widely used in headcount calculations that measure the number of employees.

However, if you pay your interns, you will need to include them in your calculations. If you’re offering health coverage to remote workers, there may https://www.bookstime.com/ be some additional considerations. FTE calculations are also important when determining eligibility for certain federal programs and benefits.

Source definition

For example, if Jane works 35 hours a week, or 140 hours in a month, she would be considered a full-time employee. We’ll assume that where you are, full-time employment means working 8 hours a day, 5 days a week, for 52 weeks a year.

• 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.
• A full-time employee is equivalent to an FTE of 1.0, while an individual with half the workload makes up an FTE of 0.5.
• The full-time equivalency measurement lets you calculate the hours those employees work compared to a full-time workload.
• Calculating FTEs will also determine an employer’s duties under the shared responsibility provisions of the Affordable Care Act.
• There are several tools online called “employment calculators” to get an estimate about your overall costs for employees in different countries.
• From what it is and why it’s used to how to calculate the number, find out everything you need to know about how to calculate FTEs.