Key global rules affecting FTE include the Fair Labor Standards Act (FLSA), laws on working conditions, healthcare rules, union deals, tax and benefits laws, and data privacy rules. Employers must calculate FTE accurately to determine things like overtime pay and staffing needs. Staying up-to-date on laws, getting legal advice, and having clear processes are crucial to ensure FTE calculations are legal and fair to workers while following the rules. 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).

• The calculation is straightforward — divide the employee’s scheduled hours by the number of hours that represent an official weekly full-time schedule in a company (e.g., 40 hours per week).
• Stay updated on international hiring, employment, compliance, and payroll news.
• For example, if your entire staff works part-time, the FTE employee is a hypothetical full-time worker by which your part-time workers are measured.
• HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24.
• Five of them work full-time (40 hours per week), three occupy a part-time position each working 20 hours a week, and the other two each work 10 hours per week.
• A portion of this loan can be forgiven based on the number of FTE workers an employer has on its payroll.

How to calculate headcount

As for the calculation method #2, enter the number of full-time employees again and just the number of part-time employees to calculate the FTE. 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. Factors such as regular hours worked, overtime hours, paid time off, and employee classifications (full-time, part-time) should be considered in FTE calculations. FTE is used in budgeting to https://www.bookstime.com/ estimate labor costs, allocate resources, and determine staffing needs based on workforce capacity. Companies use full-time equivalent (FTE) measurements because they provide a standardized way to evaluate and compare the workload and contributions of employees, even when their work hours vary. A full-time equivalent, often shortened to FTE, serves as a standard measure for employed individuals or students, allowing for comparison even if their weekly working hours vary.

Understanding Full-Time Equivalent (FTE): A Comprehensive Guide to Calculations and Applications

A part-time workforce might save you money in wages and benefits but could, in turn, cost more in rehiring and training. To identify the FTE of part-time employees, divide the total hours worked by part-time employees by the annual hours worked by one full-time employee (i.e., 2,080 hours). Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. But when you combine headcount with metrics like these, you can calculate other metrics, including FTE, employee turnover, and retention rates. These metrics help HR understand the development of their workforce and the steps needed to achieve optimal productivity and performance. Headcount reporting can also help you determine the TCOW (total cost of workforce) and revenue per employee, allowing you to weigh the financial impact of the number of employees on the business.

How FTEs Work

• In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters.
• Whether you are looking to expand your business internationally, outsource your operations, or take on more remote staff contact us today to discuss your needs.
• FTE is a very specific term used to calculate whether a company is required to provide benefits under the Affordable Care Act (ACA) and the Family Medical Leave Act (FMLA), for example.
• It provides a standardized measurement that companies can use to compare the productivity and capacity of their different departments, teams, or projects.
• Amir, Mark, Phyllis and Sue could each work 10 hours per week and the total would be 40 hours worked, or one FTE based on a 40-hour workweek.
• This calculation provides a convenient way to quantify how many theoretically “whole” full-time employees are on the company payroll per year, even if the majority of your workforce is actually part-time.

Here, we break down the steps to do so with detailed examples, and a thorough understanding of the benefits of FTEs. 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. Knowing your FTE number is also helpful for determining if your organization is eligible for certain benefits programs, such as the Small Business Health Options Program (SHOP). FTEs can be compared to revenue output and other productivity metrics to assess workload balance across the organization. On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours.

Different Approaches to Calculating FTE

In practice, these numbers fall somewhere between 30 and 40 hours per week, with 40 hours per week (8 hours per day, 5 days per week) being the most common norm for a full-time schedule. As you can see from the example above, you can easily calculate how many full-time equivalent employees you need to hire to successfully complete a project. 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. First, it is necessary to determine the number of hours worked by part-time employees. FTE is the number of determined full-time positions in an organisation.

Step 2. Define the number of hours for a full-time position

Also, do not include yourself as the business owner, unless you are paid a salary and receive a W-2. If you’re concerned about staying compliant, consider software such as Homebase that will track your employee hours, provide reporting, and can also prepare your time sheets for payroll. FTE calculations are also important when determining eligibility for certain federal programs and benefits. Whether an FTE of 0.75 is considered full-time will depend on the company policy made by the employer. 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.

FTEs calculator for project managers

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. To calculate headcount, all you have to do is add up all your employees.

• This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on.
• In addition, Homebase provides small business employers with a range of scheduling options to ensure your staff hours are within the correct range.
• In the chart below, because both Carole and Lynn are full-time employees, they would each be counted as one FTE.
• This insight allows you to address staffing imbalances, reducing potential burnout and enhancing productivity.
• The ratio of full-time to part-time employees impacts company culture, engagement, and retention.

FTE calculations are about hours worked rather than number of employees. Amir, Mark, Phyllis and Sue could each work 10 hours per week and the total would be 40 hours worked, or one FTE based on a 40-hour workweek. When used in HR, a fte meaning Full Time Equivalent refers to the total number of working hours contributed by an employee or a group of employees on a full-time basis. Essentially, FTE represents the total workload (or the equivalent) of one full-time employee.

How To Calculate FTE

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• HR must track FTEs correctly to remain compliant and avoid penalties.
• Furthermore, this value is used only as a basis for calculating the annual FTE and reflects the hours of an employee who works 5 days a week, 8 hours a day.
• 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.
• Read our employer’s guide to find out more about different types of insurance you can offer your employees.
• The ACA defines a full-time employee as someone who works 30 hours per week or 130 hours per month.