How to Calculate the Full Time Equivalent FTE in 4 Steps

To ensure that a company with 100 part-time employees is treated as fairly as one with 50 full-time employees, an FTE is calculated to compare both workforces. For instance, in terms of business, calculating FTEs can be useful in determining how many hours part-time employees should work to equal the number of hours full-time employees work. Such calculations facilitate accounting processes such as estimating wages, payroll, costs, etc. A full-time position would equate to around 30 to 40 hours per week for most employers. If a company considers 40 hours per week as the basis for a full-time position, then anyone working an amount of hours below this range is considered a part-time employee.

FTE Calculation Example

FTE is used in budgeting to estimate labor costs, allocate resources, and determine staffing needs based on workforce capacity. With FTE, you can figure out when to hire and whether a full time employee or a part time employee is required. Three full-time employees would have an FTE of 3.0 and the part-time FTE is 0.875. 100% FTE or 1.0 FTE refers to one full-time employee or a number of people who make up the duties of one full-time position. Calculating FTEs will also determine an employer’s duties under the shared responsibility provisions of the Affordable Care Act.

Add annual hours worked for full-time employees and part-time employees

A part-time workforce might save you money in wages and benefits but could, in turn, cost more in rehiring and training. 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. To identify fte meaning the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker. In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees.

Step 5. Identify the part-time FTE

• The number of full-time equivalent employees is used to determine the amount of loan forgiveness for borrowers.
• Clockify is a time tracker and timesheet app that lets you track work hours across projects.
• You’ll find the answers to all these questions and more and learn how to calculate FTE step-by-step.
• To easily calculate your employees’ FTE, try out Clockify — a time tracking tool that can also be of great help for identifying your employees’ FTEs.
• As was the case with the monthly FTE, this equation presumes that all work weeks had a total of 153 work hours.

Their salary is pro-rata, meaning they are only paid for their work hours. Our FTE calculator allows you to calculate FTE in 4 simple steps. It applies the following procedure, which https://www.bookstime.com/articles/construction-billing-methods we explain through an example for a hypothetical company. So, with all the previous steps in mind, let’s calculate the actual FTE based on the specific numbers we’ve used.

Let’s say you have four full-time employees, three part-time employees working 20 hours a week for 30 weeks per year, and one part-time employee working 15 hours a week for 52 weeks per year. Get this by multiplying the number of full-time employees by the number of hours in a working week (usually 40, though sometimes less). To calculate FTEs and see if you qualify for tax credit, you can choose one of the said methods — either The actual hours worked or Days-worked equivalency methods (we’ve provided calculators for each). 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.

How to calculate FTE?

• Knowing your number of FTEs is important for assessing business performance, and it’s required under the Affordable Healthcare Act (ACA) and for certain tax credits.
• An FTE of 100% is equal to the amount of work one full-time employee performs within a given time period (a day, week, month, or year).
• Knowing this will help you stay compliant with state and federal laws.
• Below is a step-by-step guide to two common FTE calculation methods, along with an example calculation to illustrate the process.
• Conversion to contractors is necessary if this has a clear cost-benefit to the government.
• On the other hand, FTE is used for complex and intensive projects that may require different or reinvented frameworks, methodologies, and processes.
• To calculate FTE for COBRA, multiply the number of part-time workers you have by the average number of hours they each work per week, and divide the result by 40 (the working hours in a week for a full-time employee).

It comes in the form of a tax credit worth half of employee wages over the course of a covered period. A simpler way of calculating FTE for PPP is to assign an FTE of 1.0 to employees working 40 or more hours per week, and an FTE of 0.5 to those who work less. The Paycheck Protection Program (PPP) is designed to prevent job losses during the pandemic by giving loans to small businesses to cover payroll expenses and other costs.

Strategic Uses of FTE Information

• For example, let’s say a company considers 40 hours per week as full-time employment.
• If 0.75 FTE is considered full-time in a company, such employees may qualify to apply for the Public Service Loan Forgiveness (PSLF) program — eligible employees don’t have to pay out their federal student loans.
• Suppose a company currently has 50 full-time employees on its payroll, along with 10 part-time employees.
• For purposes of the employer shared responsibility provisions, a full-time employee is, for a calendar month, an employee employed on average at least 30 hours of service per week, or 130 hours of service per month.
• For example, an employee scheduled to work 21 hours per week would be 0.6 FTE when the full-time workweek is 35 hours.
• Instead of just counting heads, FTE lets you see the real impact of your team’s hours which can be easily calculated and tracked automatically by a time tracking software.

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. Whether you want to calculate an FTE for an individual employee (part-time or full-time) or determine the FTE within your entire organization, take a look at the following calculations for further information. With the required inputs in place, we can arrive at approximately 52.40 FTEs by dividing the total hours worked by all employees by the total number of available work hours in a year. Full-time equivalent students[9] is one of the key metrics for measuring enrollment in colleges and universities.

Identifying Full-time Employees

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. If you’re ever asked to calculate FTEs for your company, the person or organization asking you for the figure should be able to outline exactly how they expect you to arrive at your result. Generally speaking, you can arrive at your own FTE by following the steps below. Find out about manufacturing costs and their types, and gain insights with examples. This number may point to one person working a full-time schedule or several people fulfilling the duties of one full-time position. Furthermore, such businesses may have their loans fully forgiven if they maintain the same number of FTEs during the period for which they receive financial assistance.

How To Calculate FTE?