For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to. 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.
Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle while federal programs use different FTE calculation methods. The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an employee hourly PTO accrual rate. These rates will depend on PTO accrual rate policies of a company, organization, or institution. An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position. The actual workload is not taken into consideration for this calculation.
What is an FTE salary? How to calculate an FTE salary?
Each employee who worked less than 40 hours per week on average during a specific calculation period counts as 0.5 FTE and is viewed as a part-time employee. Each employee who worked more than 40 hours per week on average during a specific calculation period counts as 1.0 FTE and is viewed as a full-time employee. To calculate the number of full-time equivalent employees, the total number of hours worked is compared with the number of hours that represent an official weekly full-time schedule in a company (e.g. 40 hours per week).
Your FTE calculations must be accurate for IRS and Department of Labor reporting. At 50 FTEs, you’re required by the ACA to provide health insurance to your employees and by the FMLA to allow employees to take up to 12 weeks of leave for qualifying conditions. In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees.
What is full-time equivalent and how to calculate it (+ free FTE calculators)
The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees. To calculate the full-time equivalent for the actual full-time employees, simply do a headcount.
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. Jennifer Hartman is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources. With the required inputs in place, we can arrive at approximately 52.40 FTEs by dividing the total hours worked by all employees by the total number of available work hours in a year. 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. To find the equivalent of a full-time day, divide the total number of hours by 8. In other words, do you know what the full time equivalent is and how it can help you better understand the needs of your organization?
How to calculate FTE to determine the headcount needed for a project
However, the IRS mandates only 30 hours per week or 130 hours per month for an employee in the US to be considered full-time in terms of the type of employment. FTE is the full-time equivalent hours that all the employees in your business represent. Full Time Equivalent refers to the unit of measurement equivalent to an individual – worker or student – one unit of a work or school day, applicable in a variety of contexts. In most cases, full time equivalents measure an employee or student and/or their workload. Full-time equivalent , or whole time equivalent , is a unit that indicates the workload of an employed person in a way that makes workloads or class loads comparable across various contexts.
- – 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours .
- The standard calendar is the calendar that has the Standard check box checked under Administration – Base Calendars – Edit Calendar Properties tab.
- According to the IRS and the ACA, part-time employees work fewer than 30 hours a week on average.
- Divide the total hours worked by the number of full-time hours for the given time period to find the FTE.
- In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees.
FTE is often used to measure a worker’s or student’s involvement in a project, or to track cost reductions in an organization. An FTE of 1.0 is equivalent to a full-time worker or student, while an FTE of 0.5 signals half of a full work or school load. After calculating your Cost Per Employee (and the other figures I’ve mentioned in this article), you can add a Cost of Labor number for each of the employees you track in Toggl Track. Now that you know how many hours a full-time employee works for your company, you probably want to know the totalcost of an employee. FTEmeans the equivalent of a full-time scientist’s work time over a twelve month period .
Holiday hours and other paid leave are already accounted for as part of the hours worked so you don’t need to make any special calculations. If your business has a 32- or 35-hour workweek, then multiply the number of employees https://www.bookstime.com/ by that amount instead of 40. Of course, employee profitability factors heavily into hiring decisions. Remember, to average the number of employees you employ across the year, especially if you run a seasonal business.
- When 8 working hours are divided into 136 hours, the result is 17 FTEs.
- However, the IRS mandates only 30 hours per week or 130 hours per month for an employee in the US to be considered full-time in terms of the type of employment.
- This ensures that you’re not getting a skewed result based on a higher or lower number of hours worked in a week than typical.
- To calculate FTE, identify the total number of hours worked by part-time employees during a particular time period.
- While FTE assesses the number of hours worked by employees, headcount looks at the actual number of people employed.
- Based on an FTE of 1.0, we calculate employees work 2,080 hours per year.
- Full Time Equivalent refers to the unit of measurement equivalent to an individual – worker or student – one unit of a work or school day, applicable in a variety of contexts.
💡To track employee work hours and decide whether your employees are full-time equivalents, try Clockify, our free time tracker for teams. The paycheck protection program or PPP is a scheme rolled fte meaning out by the government to encourage companies to keep workers on their payroll. To claim PPP, you may need to keep a PPP chart for the scheme’s duration to show your employee retention.
More Definitions of FTE
Do you want help with the management of your company’s key figures, helping your team make the right decisions, and implementing the right measures in personnel planning? If you want to save time, why not use our free full time equivalent calculator template for excel to easily work out your company’s FTE. Everything you need to know about the 4-day workweek concept A 4-day workweek offers better employee productivity and engagement. Learn more about its pros and cons, and countries that adopted it….
You can adjust and diversify the calculations based on the project’s scope and requirements, scaling up or down as necessary. The part-time employees, on the other hand, work 20 hours per week and 25 weeks out of the year. The expected length of a full-time schedule has changed a lot through history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century. By comparing full-time employee’s numbers between industry competitors a company can analyze its current status about staffing, this can lead to conclusions like whether the company is under-staffed or over-staffed. Under normal circumstances, a full-time employee works 8 hours a day for 5 days a week.