What Is FTE & How to Calculate It

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. If you have both full-time and part-time employees in your company, you have to define how many FTEs you have in total. Suppose a company currently has 50 full-time employees on its payroll, along with 10 part-time employees.

To calculate for the month, divide by 173.33, which is equivalent to 2080 hours divided by 12 months. Human resources often use the FTE metric to make staffing decisions for the entire company. Let’s say you need to calculate the total amount of hours, time, and money required for your business to run successfully. To determine whether a company is an Applicable Large Employer , the ACA says that a company must have an average of 50 or more FTE employees over the course of one year. The ACA considers a full-time employee one who works at least 30 hours per week.

How Do You Convert FTE to Hours?

To find the equivalent of a full-time day, divide the total number of hours by 8. You typically would not include hours that owners or partners work within this calculation, but you can do so for your own accounting purposes if you want to include labor from ownership as part of your evaluation. If you increase your opening hours and are open every day of the week, then you have a 0.875 FTE. If the trucks open at the same time, then you require two different people to run them.

In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards. The PPP is an SBA program that helps preserve a business in times of crisis. The total FTEs number is used to calculate the loan that borrowers are eligible for. To calculate the FTE metric, find the average number of FTEs per month from two different time periods . Full-time equivalent is a unit of measure that helps employers calculate the number of hours worked by all employees in their company. Let’s say you have four full-time employees, three part-time employees working 20 hours a week for 30 weeks per year, and one part-time employee working 15 hours a week for 52 weeks per year.

Why is it important to calculate the FTEs?

The full fte meaning 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 40-hour workweek calculation is applicable if you are doing the math for accounting and business purposes. However, FTEs are calculated differently for different purposes. 0.5 FTE is the number of hours required for a part-time worker, approximately 20 hours per week.

• This calculation provides a convenient way to quantify how many theoretically “whole” full-time employees are on the company payroll, even if the majority of your workforce is actually part time.
• A full-time equivalent — also known as a whole-time equivalent or WTE — represents the sum of all full-time hours employees work in a certain company.
• FTE is frequently used to assess an employee’s workload and its contribution to a project, or to track cost savings in a company.
• So, in this case, you would add up all employee hours for the year and divide by 2,080.
• Now that we’ve got that out of the way, let’s take a look at how to calculate FTE.
• This is useful when determining employee outputs as schedules and budgets for part-time employees continue to change.
• The full-time employees work 40 hours per week and 52 weeks out of the year, meaning that the number of full-time hours worked on an annualized basis is 104,000 hours.

The actual number of working hours spent by an employee is not considered in these calculations. That means you have to add up the number of FTEs of your full-time employees and the number of FTEs of your part-time employees .

What is Full-time Equivalent (FTE) & How to Calculate It

A 100% FTE is the same as a 1.0 FTE — it may point to one person working a full-time schedule or several people fulfilling the duties of one full-time position. Outside the business environment, this unit of measure is also used to measure a student’s class load or involvement in a school project. FTE refers to one full-time employee or the equivalent of a full-time employee. The amount they are liable to pay the IRS for an employer shared responsibility payment. This is also known as “the employer mandate” or “the pay or play provisions”.

• In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards.
• FTE has a lot of different uses and calculation methods depending on why you want to calculate it.
• To determine this amount, ask yourself, what do you expect a full-time employee to work in terms of hours per week?
• Wrike Blog Latest news and best practices on project management.
• 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.

You can use the FTE total each week, month, or year to determine company growth. You can also use the FTE total to remain compliant with federal, state, and local labor laws that may be based on employer size such as mandatory sick time laws. 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. But as mentioned, the full-time equivalent employee calculation can vary depending on what you are calculating the FTEs for. Full-time employees usually work 40 hours each week for over 120 days a year, but it also includes anyone who works more than 30 hours weekly.

What Is the Purpose of Calculating FTE?

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In most cases, employers fall below the threshold required to be an ALE and are, therefore, not subject to the employer shared responsibility provisions. According to the Affordable Care Act , employers with 50 or more FTEs are required to offer ACA-compliant benefits. The ACA defines a full-time employee as someone who works 30 hours per week or 130 hours per month. If your company considers the number of hours for a full-time position as 40 hours per week, note that working 30 or more hours counts as 1 FTE for purposes of ACA compliance. It is critical for accounting purposesand determining wages, and for calculating the company’s expenses when paying its workers.