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

Content manager Keith MacKenzie and content specialist Alex Pantelakis bring their HR & employment expertise to Resources.

For example, the Affordable Care Act in the United States requires applicable large employers to provide health insurance to employees working an average of 30+ hours (0.75 FTE). Many laws and regulations related to benefits eligibility, overtime pay, and other workforce standards depend on whether an employee is classified as full-time or part-time based on FTE status. On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours. A project cost overrun happens when the project costs exceed the budget estimate. 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. Bear in mind that in some cases, a year can have 53 weeks so the number of hours may be slightly different.

Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes. That said, full-time equivalent (FTE) is a metric used to determine the total number of full-time workers that you have in an entire organization. In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters.

Full-Time Equivalent (FTE) serves as a crucial unit of measurement that simplifies the way businesses assess their workforce. By translating the work done by both full-time and part-time employees into the equivalent of full-time workers, FTE offers a cohesive view of the labor force. It is critical for accounting purposes and determining wages, and for calculating the company’s expenses when paying its workers. By determining your company’s FTE you get a better understanding of how effective and useful your workers are. Part-time workers are usually paid less than full-time employees and may not have access to the same benefits.

1. This way, you will be able to determine the number of full-time equivalent workers in your company even when you have part-time workers on-site.
2. By regularly reviewing FTE calculations, HR managers can ensure that staffing levels align with company goals and legal obligations.
3. Too many staff can lead to inefficiency and higher costs, while too few can result in overload and lower productivity.
4. Clockify is a time tracker and timesheet app that lets you track work hours across projects.

How to Calculate FTE for Individual Projects

Based on the FTE value, some of your employees could be eligible for minimum or affordable healthcare insurance. Under ACA, any employee that works at least 30 hours per week, or 130 on a monthly basis, is entitled to some form of healthcare. With FTE, you can get a clearer picture of how your employees are performing in their jobs. Next, divide the above number by the ideal number of work hours for a full-time employee per month. The list should contain the names of your employees as well as the full number of work hours for a single week.

Calculate annual hours worked

FTE also provides a standardised measure for comparing staffing levels across different departments and organisations. The use of FTE plays an important role in staff planning and helps companies to optimally organize their staffing. By understanding and applying FTE properly, you can deploy your staff more effectively and budget better.

Keep Your Business Afloat With These Budgeting Methods

Monthly FTE is total hours divided by standard monthly hours (e.g., 160 hours). Yearly FTE divides total hours by standard yearly hours (e.g., 2,080 hours). Part-time and seasonal workers contribute to FTE by calculating their hours worked as a proportion of full-time hours. For example, if a part-time employee works 20 hours per week and standard full-time hours are 40, their fte full form in company FTE would be 0.5.

But to calculate FTE, you need to know the working hours and this can be easily tracked by a time tracking software which tracks offline time and idle time. Additionally, there are a lot of benefits of using time tracking software like project time tracking. You can also track project profit and loss which is very essential for the stability of an organization. First, you need to account for the hours of a full-time weekly schedule and the actual employee hours they would be scheduled to work. If it’s a 40 hour week, each employee that works 40 hours per week is equal to 1.0 FTE.

Integration of FTE data with workforce analytics enhances strategic decision-making, providing insights into workforce dynamics, trends, and performance metrics for effective planning and execution. Full-time equivalent students8 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. Now, the exact number of hours that a 100% FTE represents will depend on your company’s policies and the various labor laws in your state, country, and more.