In this blog, we explain what FTE (Full-Time Equivalent) is and why it’s important for your organization. We’ll show you how to calculate FTE, taking into account flexible working hours and working from home. The chart below displays the number of weekly hours worked with the corresponding FTE under the standard 40 work-week.
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Simply put, FTE stands for Full-Time Equivalent, a metric that helps businesses measure the number of full-time employees they would need to complete the work currently being done. This encompasses part-time employees, freelancers, and even https://www.bookstime.com/ a combination of full-time and part-time staff. It’s a crucial element in workforce planning, giving managers a clearer picture of staffing levels. An FTE of 1.0 typically represents one full-time employee who works the standard number of hours per week, typically 35 to 40, depending on the company or region.
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If a project requires 100 hours of work, calculating FTE helps determine whether your team has enough collective hours available, not just enough people. If the FTE calculation falls below this figure, the PM might add a team member or adjust the project timeline. Once you know the total hours worked and the full-time workweek, apply the FTE formula. To calculate the FTE value, simply divide the total hours worked by the number of hours in a full-time workweek. For example, if employees worked a total of 320 hours and the full-time workweek is 40 hours, you get 8 FTEs, meaning the workload is equivalent to 8 full-time employees.
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Forgetting to account for employee leave, sick days, or absences can skew your FTE calculations, leading to inflated or deflated figures. Each department’s workload determines the allocation of personnel to them using FTE. Management and HR can determine the necessary number of FTEs based on project requirements, job descriptions, or any other employment requirement. Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks. Jean Murray is an experienced business writer and teacher who has been writing for The Balance on U.S. business law and taxes since 2008. Along with teaching at business and professional schools for over 35 years, she has author several business books and owned her petty cash own startup-focused company.
The baseline in order to qualify as 1.0 unit of a full-time employee is set at 40 hours, so a part-time employee that worked 20 hours would be marked as a 0.5 fte acronym FTE. Three full-time employees would have an FTE of 3.0 and the part-time FTE is 0.875. Khyati Sagar is a seasoned HR and payroll expert with over a decade of experience in the field. She has worked with businesses of all sizes, from small startups to large corporations, helping them optimize their HR and payroll processes. As a passionate advocate for technology-driven solutions, she is always on the lookout for the latest advancements in HR and payroll software. When she’s not working, you can find her hiking or playing basketball with her friends and family.
How To Calculate FTE in 5 Steps
If your company uses the standard 40-hour workweek, 0.9 FTE represents 36 hours per week (0.9 x 40). If you use 32 hours, however, 0.9 FTE represents 28.8 hours of work each week. You can use these calculations to estimate your staffing needs for a specific period. Using the full-time equivalent metric offers a range of benefits for organizations.
- HR departments generally use FTE to standardize the working hours and salaries of part-time employees.
- By understanding and applying FTE properly, you can deploy your staff more effectively and budget better.
- Adjust your calculations to reflect annual hours worked during periods (if taken annually) when employees were on leave or absent to get an accurate measurement of workforce capacity.
- The number of full-time equivalent (FTE) workers is a measure of the sum of all employees’ hours worked, whether they are full-time or part-time.
- Your total FTE count becomes 4.25, giving you a clear meaning of your actual workforce capacity.
In general, the pay of a part-time worker is proportional to the FTE fraction. Employers can also use FTE meaning business to schedule work and staff, especially for part-time and full-time employees. FTE meaning is simply a way to state “this work takes X% of the time of a full-time employee.” It tells employees whether they will work part-time or full-time.
When working with multiple definitions across different departments or locations, create separate calculations for each group. This approach provides a more accurate tool for workforce planning and helps maintain efficiency across diverse operational structures. Create automated FTE tracking systems that pull data directly from your time management software. This eliminates manual calculations and ensures your report accuracy for budget planning and compliance requirements. The unit is obtained by comparing an employee’s or student’s average number of hours worked to the average number of hours of a full-time worker or student.
What is the difference between full-time equivalent and headcount?
As you know, healthcare and benefits can be complicated, which can make the enrollment… The government tracks this information with Form 1095-C, which is filled out for all eligible employees (even if they don’t participate in the health plan). Stay on top of FTE trends and leverage HRIS tools to master this essential workforce metric. Request a demo and witness how effortless HR and payroll data integration can be. Regional and industry differences further complicate FTE applications, as the standard definition of full-time varies. These inconsistencies make cross-border or cross-industry comparisons challenging without additional context or adjustments.
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Regardless of if they’re full time or part time employees, everyone still counts as 1. The FTE represents the total number of employees working full time hours worked in a company. Headcount refers to the number of employees you have at your company, without taking into consideration if your employees are part-time or full-time. On the other hand, full-time equivalent refers to the equivalent number of full-time employees at your company. First, it is necessary to determine the number of hours worked by part-time employees.