How to Calculate the Full Time Equivalent FTE in 4 Steps

fte meaning

Because the number of employees says nothing about a company’s actual work performance. In the chart below, because both Carole and Lynn are full-time employees, they would each be counted as one FTE. However, determining the FTE for Jimmy and Marta requires calculation. To determine your eligibility for the small-business tax credit, you’ll need to use a different system for counting FTEs.

Exploring Full-Time Equivalent (FTE): What It Means & How to Calculate It

The Affordable Care Act requires employers with 50 or more FTEs to offer healthcare benefits that line up with ACA standards. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. To work out FTE, you must know what’s considered full-time at your company. For example, if full-time is 35 hours per week, and you have two part-time employees working 17.5 hours per week, that would total 1.0 FTE.

FTE Calculation Methods

fte meaning

If you, for instance, choose the first method, enter all the actual hours worked (including PTO) and divide that number by 2,080 to get the final FTE. In this step, you have to add the total work hours worked by each full-time employee and total working hours worked by each part-time employee. Along with counting the hours worked, FTEs show how many full-time employees a particular company employs within a fiscal year or needs to employ to carry out a project. The Fair Labor Standards Act (FLSA) doesn’t define what full-time or part-time employment is for any employer. The annual hours for your part-time employees (C, D, and E) add up to 3,120 (1,560 + 1,040 + 520).

FTE Calculation Examples

On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours. Tracking FTEs over time also allows HR to identify growing or decreasing expenditure on salary and benefits. Finance teams will also be interested – ånd revenue per FTE can also be calculated from this. It’s not just about numbers; it’s about leveraging FTE data to craft strategic masterstrokes in workforce planning, budgeting, and talent management.

  • For the SBA calculation method #1, to get the FTE, enter the number of full-time employees and the total sum of work hours by part-time employees.
  • Using software for resource management simplifies (and speeds up) the process of maintaining favorable capacity levels.
  • One qualification for this credit is that the business must have 25 or fewer FTEs.
  • FTE allows companies to assess workforce capacity and the real performance of their team, the individuals within that team, entire departments, or even the company as a whole.
  • Additionally, FTE calculations give you a better sense of your current staffing levels so that you can plan and budget accordingly.
  • Additionally, you can use FTE to determine pay for part-time workers by simply multiplying a part-time employee’s FTE by the full-time salary for that same position.
  • Declining FTE percentages may indicate problems retaining full-time staff.

In this case, the calculation may show that the first professional is overqualified for the position, whilst the other needs more training and development. You’ll find the answers fte meaning to all these questions and more and learn how to calculate FTE step-by-step. Knowing about their importance can help you increase business profits and prepare for the future.

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  • Full-time equivalent is a measure that shows how many full-time equivalent employees a certain company employs.
  • A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee.
  • Yearly FTE divides total hours by standard yearly hours (e.g., 2,080 hours).
  • You can view the unused balance as a whole number or percentage for on-the-fly planning.

HR departments use FTE to standardize their part-time employees’ working hours and salaries. FTE (full-time equivalent) and headcount are both methods used to count members within an organization. The key difference is that FTE refers to the number of full-time hours being worked, while headcount is the number of employees in an organization.

FTE or full-time equivalent is a tool to help you gauge the potential productivity of your business or company. Bear in mind that in some cases, a year can have 53 weeks so the number of hours may be slightly different. Now, if you would like to calculate FTEs company-wise, make sure you adhere to the following steps below. Join BambooHR and League to explore how to go beyond wellness resolutions so your organization can reap all the benefits of a healthy workforce.

fte meaning

  • This could be an employee who works 20 hours a week, an intern who works one day a week, or an employee who is on call or only works weekends.
  • So, in this case, you would add up all employee hours for the year and divide by 2,080.
  • There are different methods for calculating FTE, depending on the organization’s needs and the complexity of its workforce.
  • Essentially, the FTE is the number of determined full-time positions in an organisation.
  • The period for calculation could be daily, monthly, or annually.

These rates will depend on the PTO accrual rate policies of a company, organization, or institution. An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position. The actual workload is not taken into consideration for this calculation. However, bear in mind that this only applies to positions that work 30 hours per week when assigned a 0.75 FTE position, i.e., the IRS minimum for a full-time definition. As you can see from the example above, you can easily calculate how many full-time equivalent employees you need to hire to successfully complete a project. Therefore, an FTE for a standard full-time worker working 40 hours per week is 1.0 FTE.

Based on the FTE value, some of your employees could be eligible for minimum or affordable healthcare insurance. Knowing this will help you stay compliant with state and federal laws. Under ACA, any employee that https://www.bookstime.com/ works at least 30 hours per week, or 130 on a monthly basis, is entitled to some form of healthcare. In step 4, we learned that the total number of work hours for all employees in a single week equals 153.

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