What Is Full-Time Equivalent FTE?

In the last step, just divide the total number of hours of full-time employees and part-time employees by the number of regular full-time hours to generate the full time equivalent for a certain period of time. Let’s say that Sarah is a part-time employee who works 28 hours per week. Her company has a 5-day work week, and full-time employees work 8 hours per day.

Essentially, it relates to the actual hours both full-time and part-time employees work during a regular workweek. By comparing that figure with industry averages the company can analyze its current productivity. What’s important is that “on average” they work under 30 hours a week.

What is full-time equivalent and how to calculate it (+ free FTE calculators)

In general, full-time means an employee who works 40 hours per week, although this can vary depending on the organization. You can work out the Full-Time Equivalent by dividing an employee’s scheduled hours by the employer’s hours for a full-time workweek. The figure 1.0 refers to one employee working full-time while the figure 0.5 refers to an employee that works half full-time hours. Jennifer Hartman has more than 20 years of writing and content experience, working with small businesses and Fortune 100 companies.

Structured Query Language is a programming language used to interact with a database…. In short, it is a crucial term that is important for HR specialists and accountants alike. As you will understand by the end of this article, there are plenty of situations in which knowing the meaning of FTE and how to calculate it can be quite useful.

What is FTE (full-time equivalent)

This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. The U.S. Office of Management and Budget, or OMB, the President’s budget office, will often place upper limits on the total number of FTE that a given agency may utilize each year. In the past, if agencies were given a ceiling on the actual number of employed workers, which was reported on a given day of the year, the agency could employ more than this number for much of the year. Then, as the reporting deadline approached, employees could be let go to reduce the total number to the authorized ceiling on the reporting date. Full-time equivalent , or whole time equivalent , is a unit of measurement that indicates the workload of an employed person in a way that makes workloads or class loads comparable across various contexts. FTE is often used to measure a worker’s or student’s involvement in a project, or to track cost reductions in an organization.

They may also be used to limit the number of times you see an advertisement and measure the effectiveness of advertising campaigns. Advertising networks usually place them with the website operator’s https://www.scoopearth.com/the-importance-of-retail-accounting-in-improving-inventory-management/ permission. In this case, knowing your headcount and comparing it to other metrics will help you figure out where there may be inefficiencies within your organization and make decisions accordingly.

Calculating FTE for the Small Business Tax Credit

When classifying FTEs and working hours in your company’s policy, you can follow suit, or define your own FTE measurements. For example, you may want to do this when you want to make an FTE offer to a new employee during a job interview. And the actual number of hours attached to an FTE will also depend on your organization’s policy.

• An FTE 100% is a full-time employee, the one working 40-hour workweeks (also known as an FTE 1.0).
• Do you want help with the management of your company’s key figures, helping your team make the right decisions, and implementing the right measures in personnel planning?
• If eligible, employers may receive a tax credit of up to 50% of the wages paid.
• A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week.
• It also impacts the calculation of labor costs and forecasts project budgets for the future.

First of all, FTE includes both full-time and part-time employees. One FTE does not necessarily equal one employee; one employee working 40 hours per week is equivalent to one FTE, but two employees working retail accounting 20 hours per week each are also equivalent to one FTE. Full-time equivalent employees are people who work the entire workweek—eight hours per day, five days a week, totaling 2,800 hours per year.

Additional FTE Frequently Asked Questions (FAQs)

– 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours . 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. Seasonal workers do not count toward an organization’s FTE total.

There’s a ton of flexibility that gives you the option to adjust with the scope of your project. Do you want help with the management of your company’s key figures, helping your team make the right decisions, and implementing the right measures in personnel planning? With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year. 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. The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.

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Sign up to receive more well-researched human resources articles and topics in your inbox, personalized for you. Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll. Form 1095-C, which is filled out for all eligible employees (even if they don’t participate in the health plan). There are 2,080 working hours in the year, and the GHI Company staff works 22,880 hours during that year. When 2,080 working hours are divided into 22,880 hours, the result is 11 FTEs.