How to Calculate the Full Time Equivalent FTE in 4 Steps

Outside the business environment, this unit of measure is also used to measure a student’s class load or involvement in a school project. Being a basic criterion in staff controlling, it is one of the most important staff indicators for companies. Particularly due to the development in the part-time sector, your staff planning will be more comprehensible and controllable with this ratio. Full-time equivalent students is one of the key metrics for measuring enrollment in colleges and universities.

• Using the same formula, the number of part-time hours worked amounts to 5,000 hours per year.
• Paid holiday is any religious, national, or state holiday that an organization provides as paid time off.
• Staff is synonymous with employees for the purpose of LEED calculations.
• Multiply the total hours worked in a week by 52, the number of weeks in a year, to find the number of hours worked annually.
• Now add the total number of hours worked by full-time employees to that of part-time employees to get the total number of hours for all employees.
• FTE, or full-time equivalent, is a unit of time defined to measure the workload, availability, or capacity of an employee.
• Do not include 1099 contractors; they are not considered employees.

Now determine the number of hours worked by full-time employees over a given period. Full-time employees are those who work a minimum of 30 and a maximum of 40 hours a week and more than 120 days a year. In general terms, full-time equivalent is a unit of measure that plays an important role in calculations used in businesses, project management, or federal programs for eligibility purposes. According to the Affordable Care Act , employers with 50 or more FTEs are required to offer ACA-compliant benefits.

Keeping FTE ACA-Compliant: What You Need To Know

Whereas, employees that works 20 hours per week are considered 0.5 FTEs. The 2,080 figure can be called into question, since it does not include any deductions for holidays, vacation time, sick time, and so forth. Alternative measures of FTE that incorporate these additional assumptions can place the number of hours for one FTE as low as 1,680 hours per year. The exact number will depend on the country where the employment is occurring, since the number of holidays varies by country.

Full Time Equipment is based on the total number of hours worked, and not the number of people employed by an organization. For example, say you run an ice cream van five hours per day, four days a week . When using fte meaning alongside other performance metrics, it can become easier to understand per-employee costs and output in a large organization. To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40.

How to Calculate Work Hours?

Besides this, clocking hours are good for evaluating performances of one-time activities. If you have the start and end times for each day of the week, you will repeat this process for each day and add up the total hours worked for the week. Nowadays, companies are aligning towards the FTE model as opposed to the headcount for many reasons. For one, headcount does not take into account the number of part-timers in a firm. For two, it focuses on the overall organizational strategy and filling roles in general but does not drill down to closing the specific skill gaps. If a company has work schedule of 40 hours a week, the employees expected to work 40 hours per week are 1.0 Full Time Equivalents.

A 100% FTE is generally compared to part-time or reduced-hours employees, who are regarded less than 100% FTE. It could be more beneficial in terms of finance when it comes to paying new part-timer employees for a project rather than overpaying already existing full-time workers. EFT can help a company discover these kinds of budget-friendly solutions. To calculate the FTE, divide the figure by the number of hours per week required for a full-time position . Of course, not every full-time employee works for 40 hours a week and 52 weeks a year because of sick leaves, vacations, holidays and time-offs.

What does FTE mean?

In this blog, we will show you what FTE is and explain how it is calculated, also how to calculate FTE for a business that is only open for a few months of the year. Outside of the business environment, FTE is also used to measure a student’s class load or involvement in a school project… It seems like we never leave school behind. The success of accurate project planning and forecasting lies in making the right choice of metric as much as it is driven by the process followed.

• However, bear in mind that this only applies to positions that work 30 hours per week when assigned a 0.75 FTE position, i.e., the IRS minimum for a full-time definition.
• These rates will depend on the PTO accrual rate policies of a company, organization, or institution.
• But if the number of working hours is a variable component, if you hire new people to your company, the calculations will be more complex, and the total FTE will vary from week to week.
• There are several ways to break down that 62.5, depending on your needs.
• We need to calculate the number of hours this employee works during the year.
• In this particular case, your FTE must be 1.0 or 0.75 as the minimum requirement.
• Keep in mind, however, that the specific strategies that may be most useful are depending on the organization and the industry.