What Is Full-Time Equivalent? How to Calculate FTE

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. As for the calculation method #2, enter the number of full-time employees again and just the number of part-time employees fte finance meaning to calculate the FTE. All you need to do is enter how many hours of work are required to complete the whole project (estimated time) and then how many hours a day your employees will work on that specific project. There are different ways to then decide how to break down that final number.

FTE in Human Resources

First and foremost, make a list of all your employees within an organization. Full-time equivalent students[9] is one of the key metrics for measuring enrollment in colleges and universities. The measure is often annualized to cover the average annual full-time equivalent students and is designated by the acronym AAFTE. You should also recognize the difference between FTE and an overall employee headcount. With a headcount, each employee counts as one, regardless of how many hours they work. This method of calculation is a common way of creating an accurate forecast.

FTE vs. Part-Time Employees

An FTE calculation is a method for measuring how many full-time employees are present at a company, alongside the number of part-time employees that in aggregate can be translated into full-time terms. This is how a company, on average, calculates the average yearly number of hours that a full-time employee works. It indicates what a company could spend on a part-time employee if they worked full time. A full-time equivalent assists in tallying work hours, salaries, employee productivity, and company’s or workplace’s productivity, as well as calculating how much time an assignment or a project will take. Full-time equivalent is used in project management and to decide eligibilities for federal programs. Next, divide the above number by the ideal number of work hours for a full-time employee per month.

Step 4: Separate the part-time hours

• Knowing your accurate FTE will help determine responsibilities for employees.
• If you want your PPP loan to be completely forgiven, you need to keep the number of FTEs during the 24-week PPP period the same as it was prior to COVID-19.
• FTE value helps in indicating the number of full-time employees that a company shall employ in a year or the number and type of employees needed to complete a project.
• 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.
• It’s a simple calculation to make and you just need to know your employee details and go from there.
• Shiftbase will help you plan enough staff to meet the demand and still keep your costs as low as possible.

Clockify is a time tracker and timesheet app that lets you track work hours across projects. 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. 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.

• It is used to measure the number of full-time employees that a group of employees or an organization’s workforce represents.
• Each government agency presents FTE estimates during the annual budget planning.
• The number of full-time equivalent employees is used to determine the amount of loan forgiveness for borrowers.
• Some employers consider anything over 35 hours per week to be full-time, while others require that employees work 40 hours per week to be considered full-time.

A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week. FTE is an indispensable metric in HR management, aiding in workforce planning, budgeting, and strategic decision-making. Understanding how FTE interacts with part-time employees and its role in recruitment and staffing is vital for effective HR operations. FTE is a vital metric that enables organizations to make informed decisions about staffing, budgeting, and resource allocation. Its versatility and precision make it an indispensable tool for businesses striving for efficiency and cost-effectiveness in workforce management. Whether you hire employees as part time or full time depends on your business needs and local regulations.

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. In other words, FTE allows companies to standardize headcount and measure workload capacity by converting part-time staff to a full-time basis. Yearly, a company generally considers an FTE to be valued at 2,080 hours.

What Is Full Time Equivalent (FTE)?

Under the PPP program, businesses can apply for funding to keep employees on payroll and cover certain operational costs. Businesses that want to apply for PPP loan forgiveness can submit eligible operational costs and proof of FTE. The SBA defines FTE employees as workers who work 30 hours a week or more. FTE also includes the sum of employees who work less than 30 hours a week, where the aggregate of work hours of those employees is equal to at least a 40-hour workweek. The amount of benefits depends on the FTE value, as some employers offer half the benefits of full-time employees to part-timers working between 0.5 and 0.75 FTE. FTE value helps in indicating the number of full-time employees that a company shall employ in a year or the number and type of employees needed to complete a project.

What Does Full Time Equivalent (FTE) Mean?

What Is a 2-2-3 Work Schedule and How to Implement It?

• This can be done manually or by using the payroll reports available from your payroll service provider.
• With a headcount, each employee counts as one, regardless of how many hours they work.
• On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours.
• It allows you to convert the various working hours of your employees into a standardized metric, making it easier to analyze and plan your workforce effectively.
• So the FTE is not the number of employees in a company, but the equivalent of a full-time employee.
• For example, if the establishment requires 30 hours of classwork per week and the student only completes 15, this will account for 0.5 FTE.