What is full-time equivalent and how to calculate it + free FTE calculators

The Coronavirus Aid, Relief, and Economic Security Act established the Paycheck Protection Program. The program provides forgivable loans to small businesses to help cover up to 24 weeks of payroll costs, interest on mortgages, rent, and utilities. 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. It helps in standardizing the salaries by showing what the equivalent salary would be of a part-time employee taking the base of working full-time. A pro-rata salary is calculated for part-time employees by adjusting their working hours with the help of FTE. One use of FTE is in calculating the size of a small business for health insurance purposes.

It might sound cold, but it’s a vital metric when companies are applying for government loans, and when determining whether the company is large enough to have to follow certain laws. To calculate the full-time equivalent for part-time employees, add up their work hours and divide that number by 120. To calculate FTE, divide the employee’s scheduled hours divided by the employer’s hours for a full-time workweek. For this example, let’s take a look at using the first method from above. Your average number of full-time equivalent employees during the reference period was 5. Add together your full-time employees and your FTE part-time employees to get your full-time equivalent employees.

How many hours is…FTE? (FTE hours requirements)

And, ACA rules state full-time employees work at least 30 hours per week or 130 hours per calendar month. The ACA’s mission is to reduce the cost of health insurance coverage for eligible individuals. The act includes cost-sharing reductions and tax credits to help lower costs for lower-income families and individuals. It requires small group health plans to meet certain requirements, such as covering essential health benefits (e.g., preventative services). FTE is a method of calculation to use when you want to accurately forecast specific needs of your business. It’s common when budgeting or managing personnel resources for projects.

FTE also helps budget analysts and project managers estimate the cost of labor. Managers may also benefit from looking at FTE to determine if overtime costs are making it worthwhile to open up a new full-time or part-time position. The Affordable Care Act requires every employer with 50 or more full-time employees working at least 30 hours per week to offer health insurance to its employees. What’s important is that “on average” they work under 30 hours a week. To get a good estimate, it’s best to average hours over a 90- or 120-day timeframe.

What is FTE?

To verify if your company is required to provide those benefits, you need to calculate your FTE count. FTE is used to allocate employees to departments, depending on each department’s workload. Management and HR can evaluate projects, job descriptions or really any employment need and assess the number of FTE needed to get the job done.

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. FTE refers to calculating the number of hours instead of the number of employees to forecast costs based on a full-time workweek. A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week. The results will reflect the actual full-time payroll of the company. These metric is particularly important when companies are comparing themselves with industry averages or with close competitors. FTE concept helps determine the workload and accordingly determines the number of part-time employees and the number of hours they will work.

Full Time Equivalent definition

With just a few clicks, managers can mobilise the nearest willing person based on their skills, or ask their staff to provide backup at other sites. The SaaS software integrates with the organisation’s HRIS to facilitate administrative management by human resources managers. From the expression of a need to contractualisation, the entire staffing process is digitalised and secured.

They also use it to calculate labor costs for the expected project workload and subsequently define the amount of funds needed to carry out the project to its end. For companies who only employ full time workers, this is easy, as the sum of all workers is the sum of FTEs. It is when a company has workers that work part time, temporarily, and/or have qualifying independent https://www.bookstime.com/ contractors that calculations are more complicated. Next, divide the total hours worked by part-time employees by 120 hours to find how many full-time employees your part-time workers make up. For example, an employee who works a full-time, 40-hour week would equal 1.0 FTE. As would four part-time employees who each work 10-hours per week, totaling 40 hours.

Essentially, it relates to the actual hours both full-time and part-time employees work during a regular workweek. Thus FTE, termed Full-Time Equivalent is a unit that represents the total hours worked by a full-time employee on a regular basis. The costing team uses the concept of converting the work executed by part-time employees as compared to full-time employees. It helps determine the number of full-time and part-time employees for a task or project. FTE is Full-Time Equivalent; it represents the total hours worked by a full-time employee on a regular basis. The organization uses the concept of converting the work executed by part-time employees compared to full-time employees.

Using an online calculator

Generally, a regular workload of a full-time employee is 8 hours a day for five days a week. This is the usual work schedule of many businesses in the United States. FTE, or “Full-Time Equivalent,” is a unit of measurement equivalent that refers to the number of hours worked by one employee on a full-time basis. Simply put, FTE is the measurement of an employee’s workload.

It adds the total hours worked by part-time employees into the number of equivalent full-time workers. This metric is utilized by employers and companies to monitor workloads for their employees and to plan for future budgeting, Full Time Equivalent and staffing. It acts as a compliance monitor and control mechanism which in turn bridges the company statistics with study them in line with various laws or benefit from applicable programs offered by the government.

Calculating FTEs

In most cases, full time equivalents measure an employee or student and/or their workload. If you employ at least 20 FTE employees on more than 50% of your typical business days in the past calendar year and offer a private-sector group health plan to employees, you must offer COBRA continuation coverage. Multiply the number of part-time workers you have by the average number of hours they work per week . Check out the examples below on how to calculate full-time equivalent employees. Business owners can use 60% of the loan for payroll costs and 40% for non-payroll expenses (e.g., interest on mortgages, rent, and utilities). The PPP incentivizes small businesses to retain employees on payroll during the coronavirus pandemic.

• There are 168 working hours in January, and the ABC Company staff works 7,056 hours during the month.
• Any employee working at least 30 hours per week is considered full time.
• They are not measured in fractions or percentages — one employee is equal to one employee, no matter how many hours that employee has worked throughout the year.
• To calculate FTE, divide the employee’s scheduled hours divided by the employer’s hours for a full-time workweek.
• This is mostly the case if your company has several establishments.
• In the end, round this down to the nearest whole number , and add the 2 full-time employees to get the final FTE .

If the salary is $100,000 for a full-time employee, someone working in that role 20 hours per week, or a 0.5 FTE value, would make $50,000. Someone working 30 hours, or a 0.75 FTE value, would earn $75,000.

The number of employees in a company is not an easy concept to define. Staff movements can be numerous depending on your activity, the economic context, the contract of each of your employees and the size of your company.

If your company uses a standard 40-hour workweek, someone who works 30 hours has an FTE value of 0.75. This calculation comes from dividing 30 hours by 40 hours to get 0.75. If you use a different number of hours for full-time, divide 30 by that amount to get the FTE value. Your average number of FTEs for the 2019 calendar year is 90. Because your 2019 average is fewer than 100 FTEs, your Employee Retention Credit is based on wages paid to all employees. If you take out a PPP loan, your lender looks at your FTE employee headcount during the covered period to determine loan forgiveness.

• There are 2,080 working hours in the year, and the GHI Company staff works 22,880 hours during that year.
• 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.
• A typical 40h workweek is a term you are surely familiar with.
• You must follow this definition, even if your company policy defines full-time employment differently.
• 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.
• FTE refers to calculating the number of hours instead of the number of employees to forecast costs based on a full-time workweek.

Full-Time Employees generally work more than 4 days or 30 hours a week and are permanently employed, as opposed to being temporary or seasonal. In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards. 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. It is a unit of measurement that represents an employee’s work hours on a weekly full-time basis. First, it is necessary to determine the number of hours worked by part-time employees.

Example of full time equivalent calculation

However, bear in mind that this only applies to positions that work 30 hours per week when assigned with a 0.75 FTE position, i.e. the IRS minimum for a full-time definition. In contrast, non-exempt positions who typically work only 28 hours per week on a 0.75 FTE schedule do not qualify, even if the employer policy defines them as full-time. In one company, a full-time schedule may be 40 hours per week.

Calculate the number of hours worked by full-time employees. Get this by multiplying the number of full-time employees by the number of hours in a working week . FTE counts part-time employees as some fraction of a full-time employee, usually based on the number of hours they work (though depending on the business, there are other ways of measuring a given employee’s contribution). To determine the part-time FTE, divide the hours worked by part-time employees by the hours worked by full-time employees.

What are the benefits of calculating FTE?

In other words, one part-time employee is equal to 0.5, or half, of a full-time employee for hours, worked. Small businesses are eligible for small-employer health care tax credit — they apply to employers who employ less than 50 full-time equivalent employees. FTE stands for full-time equivalent, and it measures how many total full-time employees or part-time employees add up to full-time employees your company employs. It helps employers forecast workforce needs for hiring employees, and it’s a metric you might need for things like tax credits and compliance with the Affordable Healthcare Act. If you need to track employee hours or salaries, it’s useful to understand how to calculate FTE. When you calculate full-time equivalent employees, you generally find the average hours worked by your part-time employees during a certain period of time. Then, you divide that number to determine how many FTE employees your part-time employees make up and add them to your full-time employee total.

FTE is the answer, full time equivalent will help you do this. Your 55 part-time and full-time employees are equal to 48.68 FTE.

What Does FTE Stand For and Why Do Employers Use It?

You can enter all your data into an online tool that will take care of everything for you. Before reading this article I was in a haze, but this article reassured me and got me going.» Jill Newman is a Certified Public Accountant in Ohio with over 20 years of accounting experience.