What Is Full-Time Equivalent FTE?

A full-time fte meaning is a unit of measurement used to figure out the number of full-time hours worked by all employees in a business. If your business considers 40 hours to be a full-time workweek, then an employee working 40 hours per week would have an FTE of 1.0. In contrast, a part-time employee working only 20 hours per week would have an FTE of 0.5—which shows that their hours worked are equivalent to half of a full-time employee.

• Our part-time employee’s annual FTE salary would be 26,400 dollars and their weekly pay would be 507 dollars.
• There are different ways to then decide how to break down that final number.
• Let’s say that Sarah is a part-time employee who works 28 hours per week.

Microsoft Teams Collaborate on Wrike projects without leaving Microsoft Teams. Project Tracking Track progress and monitor multiple projects with dashboards. Professional Services Take control of billable hours and increase client satisfaction. Let’s run through the steps to calculate the FTEs that need to be replaced.

What is an FTE salary? How to calculate an FTE salary?

Read our employer’s guide to find out more about how to hire employees in Europe, Asia, Africa, or elsewhere. In this article, we will explore the meaning of FTE from a U.S. perspective, how it is calculated and the purposes of doing so as an employer. 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. In reference to an individual, 0.5 usually refers to the fact that the worker renders less than a full day of work or the student attends less than a full day of classes.

If your project is estimated to need 250 hours of work to complete, take those 250 hours and divide them by 8 hours, a normal full-time workday. You’re left with 31.3 which is equal to how many full-time employees you would need to fulfill those 250 hours of project time. Your FTE number is also an important factor in determining if you’re considered an applicable large employer. An applicable large employer means that you have 50 or more full-time employees or a combination of full- and part-time with a total FTE of 50. There are several ways to break down that 62.5, depending on your needs.

How Do You Convert FTE to Hours?

Then, as the reporting deadline approached, employees could be let go to reduce the total number to the authorized ceiling on the reporting date. Keeping track of employee hours ensures everyone gets a fair share of the workload. It also keeps part-time workers from going over their allotted hours each month.

Our team at Floatemploys a global remote workforce, with most working from home (or from a co-working space). We operate asynchronously, so everyone can choose which hours work best for them. Let’s review what FTE means, why it’s essential, and how to use it for resource management.

What is a Full-Time Equivalent (FTE)?

This is how a company, on average, calculates the average yearly number of hours that a full-time employee works. 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. You can work out the Full-Time Equivalent by dividing an employee’s scheduled hours by the employer’s hours for a full-time workweek. Full-Time Equivalent provides the basis for understanding the individual’s contribution towards organizational success. It serves as a useful scale to calculate a variety of performance metrics in business and can act as a resourceful tool to enable an optimum staffing model.

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. Although most businesses consider 40 hours a week and 160 hours per month full-time employment, according to the IRS, 30 hours a week and 130 hours per month are enough. In some cases, employers consider 37.5 hours a full-time work week because they don’t include the 30-minute mandatory daily break. Full-time equivalent is a unit of measure that helps employers calculate the number of hours worked by all employees in their company.

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Rated #1 on G2 for resource management, more than 4,000 of the world’s top teams choose Float to plan projects, manage resources, and track their team’s time. This rate is known as the affordability threshold and is typically adjusted every year to account for changes in market conditions, healthcare premium growth, and the American economy. Another key provision in the ACA states that all ALEs must offer a health insurance plan that qualifies as minimum essential coverage , otherwise known as the employer mandate.

There are many ways that you can measure the people power and resources in your company, like tracking worked hours, or using a simple head count. In order to get a more accurate and nuanced understanding of your team’s human capital, however, you should use Full-Time Equivalents . It’s also important to note that FTE is not just limited to full-time and part-time employees — it can also be used to compare temporary and contract workers to full-time employees. Parametric estimation in project management Learn about parametric estimation in project management and accurately estimate the time, resources, and cost of your project…. However, if your company employs part-time employees as well, several of them together may equal 1.0 FTE. To calculate the FTE for all employees in your company, consider the full-time and part-time employees you employ.

The Importance of Calculating Your FTE

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. For instance, in terms of business, calculating FTEs may be of great use when determining how many hours part-time employees should work to equal the number of hours full-time employees work. Such calculations facilitate accounting processes such as estimating wages, payroll, costs, etc.

• Those five workers are in fact equivalent to 3.37 full-time workers.
• Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees.
• FTE refers to one full-time employee or the equivalent of a full-time employee.
• Join us on this webinar case-study to see how Vimeo was able to leverage the BambooHR and Boomr integration to simplify their workforce management and streamline their processes.