Full Time Equivalent FTE Formula + Calculator

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. Employers can use an average number of FTE employees for each pay period falling within a month. You can apply different methods for different classifications of employees, as long as you apply the method consistently within each classification. Once you have a total number of hours, divide by 2,080 and round down for your FTE.

Importance of FTE in Business

While we strive to provide up-to-date and accurate information, we do not guarantee the accuracy, completeness and timeliness of the information on our website for any purpose. We are not liable for any damage or loss arising from the use of the information on our website. By aligning development initiatives with FTE insights, organizations can ensure that their workforce remains agile, skilled, and fully equipped to meet the challenges and opportunities of the future. Using a Kiosk — for more advanced time management, choose the time clock Kiosk in Clockify where employees can clock in with their PIN code (just make sure you enable it in the Settings section). 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.

Variability in Work Hours

On the other hand, FTE is used for complex and intensive projects that may require different or reinvented frameworks, methodologies, and processes. These tasks will demand more focus and commitment; full-time employees are best placed to provide the solutions. For example, if an employee’s salary was $30 per hour and the individual worked 40 hours per week, their salary would be $1,200 monthly.

Why Calculate the Full Time Equivalent?

• All the above-mentioned factors end up costing the company something and affecting its bottom line.
• Factors such as regular hours worked, overtime hours, paid time off, and employee classifications (full-time, part-time) should be considered in FTE calculations.
• Yearly, a company generally considers an FTE to be valued at 2,080 hours.
• FTE plays a pivotal role in optimizing labor costs and ensuring that you are getting the most value from your workforce.
• FTE is an important calculation for businesses that need to keep track of organizational costs, efficiency, overtime hours, work output, and the overall strain on certain departments.

Understanding these scenarios and factors influencing FTE calculations is essential for effective workforce management and resource allocation within your organization. Three full-time employees would have an FTE of fte finance meaning 3.0 and the part-time FTE is 0.875. This process needs to be repeated for every payroll week throughout the year. If your employees work the same number of hours every week, the calculation process will be simple.

• The calculator will then tell whether you are an Applicable Large Employer or not.
• For example, 1.0 is typically the FTE representation of an individual’s full work/school day, while 0.5 would indicate half of the original figure, generally in reference to the workday.
• The ratio of full-time to part-time employees impacts company culture, engagement, and retention.
• The information on our website cannot be considered a substitute for legal and binding advice for any specific situation.
• Since Clockify basically did most of the job by tracking your employees’ work hours — the other part of the FTE calculation will be quite straightforward.
• If an employer has a 40-hour workweek, a worker scheduled for 40 hours per week is 1.0 FTE.

What Is Full-Time Equivalent (FTE) and How to Calculate It?

A full-time equivalent (FTE) — also known as a whole-time equivalent or WTE — represents the sum of all full-time hours employees work in a certain company. When it comes to running a successful business, you always want to be as efficient as possible and cut costs wherever you can. Calculating your FTE highlights areas for improvement when it comes to project needs or employee hours. Under the ACA, certain small businesses are eligible for a small-business tax creditto help with the costs of offering health benefits to employees. One qualification for this credit is that the business must have 25 or fewer FTEs.

Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year. To do this, multiply the number of weeks in a year with the number of hours for a full-time position. Because many government agencies use FTEs when determining eligibility for certain programs, it’s important that you or your benefit administrator calculate your full-time equivalent employees properly. The number of FTEs your business has can also affect your business taxes, since many programs provide tax deductions based on the number of FTEs your business employs. This indicates that the combined hours of your three part-time employees (80 hours), when divided by your regular full-time workweek (40 hours), equals two FTEs.

How to Calculate Full Time Equivalent (FTE)

The first step to calculating the FTE of your company is to make a list of all of your employees. Simply put, full-time equivalent is the total number of hours worked by an employee to meet the requirement for full-time status. Let’s say you have an upcoming project and you need to determine all your costs. You’re able to establish all of your personnel requirements by calculating FTE.

• This determines how much money a company should allocate to pay the researcher.
• If your project is estimated to need 250 hours of work to complete, take those 250 hours and divide them by 8 hours, a normal full-time workday.
• It’s rare to see wired headphones these days, but they often provide benefits that you might not have thought about.
• Some may even assume any employees who work more than 20 hours a week to be 1 FTE.
• Prior to joining the team at Forbes Advisor, Cassie was a content operations manager and copywriting manager.

The number of full-time equivalent employees is used to determine the amount of loan forgiveness for borrowers. The term “full-time equivalent” is often used to calculate government employees. However, the number of FTEs in a government agency will depend on the project’s requirements that are being carried out, its timeframe, and budget allocations or restrictions.

An FTE employee is not necessarily a single employee; it may be a combination of several part-time employees who, when their hours are added together, create a full-time equivalent, or FTE, employee. In practice, FTE is measured by companies to estimate the number of full-time employees employed within a specific time frame. The Full Time Equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee. Proof of FTE is evidence required for Paycheck Provider Program (PPP) Loan Forgiveness. The PPP is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

HR can analyze FTE ratios to ensure the workforce alignment supports desired cultural goals. Both company leaders and HR can evaluate job descriptions, projects, or virtually any other work need and determine the FTE number necessary to successfully complete a particular job. You’ll find the answers to all these questions and more and learn how to calculate FTE step-by-step. Armed with solutions like automated tools and clear policies, we can conquer these obstacles. I urge you to use these methods to boost success and innovation in your business strategies, ensuring growth and sustainability in today’s ever-changing business world. Below is a step-by-step guide to two common FTE calculation methods, along with an example calculation to illustrate the process.