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What is Full-Time Equivalent FTE & how to calculate it

what is fte employment

First, let’s look at what full-time equivalent or FTE actually means. The full time equivalent, often abbreviated as FTE is an indicator that reflects an employee’s productive capacity. An FTE of 1.0, for example, corresponds to the hours worked in a day for a full-time employee. Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5. The hours worked refer to how many hours your employees worked, including all statutory holidays and leaves as well as overtime hours.

what is fte employment

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. As you can see, the part-time employees are converted into the performance of a full-time employee. So the FTE is not the number of employees in a company, but the equivalent of a full-time employee. Because the number of employees says nothing about a company’s actual work performance. The list should include the employee’s name and the number of hours they work per week.

FTEs calculator for project managers

With Clockify, you can easily track your cost rates per employee and then compare and contrast them with employee billable hourly rates. Bear in mind that this is just the expected number of hours Olivia may work with a 0.7 FTE — she will likely use some of these hours for PTO. To encourage more research some universities offer 2 FTEs or even 3 FTEs for each full-time researcher. Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI’s full course catalog and accredited Certification Programs. 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.

Once you have a total number of hours, divide by 2,080 and round down for your FTE. Knowing your number of FTEs is important for assessing business performance, and it’s required under the Affordable Healthcare Act (ACA) and for certain tax credits. The method for calculating FTE is slightly different for each of these uses. Essentially, https://www.bookstime.com/articles/construction-in-progress-accounting the FTE is the number of determined full-time positions in an organisation. It is used to count employees depending on their degree of employment. Marija Kojic is a productivity writer who’s always researching about various productivity techniques and time management tips in order to find the best ones to write about.

What Is Full-Time Equivalent (FTE) & How Is It Calculated?

For example, you may want to do this when you want to make an FTE offer to a new employee during a job interview. And the actual number of hours attached to an FTE will also depend on your organization’s policy. Considering that the FTE unit of measure is based on the total number of hours worked — it may not indicate the actual number of people working in a company. Most US companies adhere to the standard 40-hour, five-day workweek.

what is fte employment

Altogether, those 18 employees only account for the hours of 4.5 full-time employees. It represents a single full-time employee or multiple part-time employees whose hours add up to one full-time employee’s hours. The annual hours for your part-time employees (C, D, and E) add up to 3,120 (1,560 + 1,040 + 520). The annual hours for your full-time employees (A and B) add up to 4,160 (2,080 x 2). This includes three full-time employees that work 40 hours per week.

Calculating FTEs for the Small Businesses Tax Credit

To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40. For example, if an employee has an FTE of 0.80, multiplying that number by 40 means that an employee works fte meaning 32 hours a week. Bring the power of award-winning HR software to time tracking for your employees, managers, and payroll team. FTE is important for calculating labor costs incurred by your company.

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