What is Full-Time Equivalent? With Calculations

Full-time equivalents is a metric used to show you what your total labor hours equates to in full-time employees. The Paycheck Protection Program is a Small Business Administration program to help employers retain employees during the public health and economic crisis. The number of full-time equivalent employees is used to determine the amount of loan forgiveness for borrowers. fte meaning It is sometimes useful to know how the total number of full-time and part-time employees are working in a business. But, in many situations, a business needs to view or report its staffing level in terms of full-time work. Knowing your number of FTEs is important for assessing business performance, and it’s required under the Affordable Healthcare Act and for certain tax credits.

The Full-Time Equivalent is the number of hours a business considers a full-time employee to work. While each business may require a different number of hours, legally most employees are full-time at 30 hours a week. Employers may also base their extra benefits and bonuses on the number of hours worked. A company may have the policy that only employees working 0.75 FTE and higher receive paid vacation days or a longer lunch break. To do this, take the number of hours a full-time employee should work each week, and multiply by how many weeks per year the company expects the employee to work. To calculate the Full-Time Equivalent, simply divide the number of hours an employee works by the number of hours the company counts as full-time.

How to convert FTEs to work hours? (+ FTE hours requirements)

Use that figure if full-time in your organization is 40 hours per week. Adjust it according to what full-time schedule is in your business. FTE calculations make project planning easier and more accurate because project managers know the actual capacity their team has, and the capacity required for a particular project. If a project manager has several projects at the same time plus several projects planned for the future, it becomes impossible to plan resources accurately without calculating FTEs. This is the number of working hours spent by 5 full-time employees per working week. 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 .

The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision Estimator to help you determine FTEs and see if you qualify as an ALE. You make better business decisions by accurately assigning activities to exact staff members. The ‘FTE salary per year’ box will automatically calculate the FTE salary. Learn more about small business finance and accounting on our resource guide. With three part-time positions, this results in a value of 1.5. The full-time equivalent is an indicator that answers many of the questions Human Resources departments need answers to.

FTEs in the workplace

Determine how many hours an employee works in a year by multiplying the number of hours they work in a day, by the number of days they work a week, by the number of weeks they work a year. Remember to deduct any allotted holidays, vacation and sick days from the total number of hours working in a year. For our examples, we are allotting four weeks total time off a year, bringing the number of working weeks down from 52 to 48. If you fail to meet the mandate for one full year but have met other requirements, you will owe an amount equal to the number of full-time employees you employed during that year, minus up to 30 employees.

We need to calculate the number of hours this employee works during the year. Calculate the number of hours employees have worked per month. Full Time Equipment is based on the total number of hours worked, and not the number of people employed by an organization. When using FTE alongside other performance metrics, it can become easier to understand per-employee costs and output in a large organization. For example, comparing the two groups over time allows an organization to find opportunities to improve efficiency when hiring seasonally or when making part-time and full-time staffing decisions. To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40.

FTE

This FTE calculation can be done before actually hiring someone, which gives you time to find the right person for the job and avoid last-minute scrambling. Someone who works 20 hours a week would be a 0.5FTE, however, an employee who works 25 hours a week would be 0.63FTE. To convert the number of hours an employee is expected to work based on his/her FTE, we shall reverse the previously discussed process. Then we shall take the number of hours a particular employee spends within the working week . Divide the total number of hours by 2080, and that ultimately determines the number of FTEs. Join BambooHR and League to explore how to go beyond wellness resolutions so your organization can reap all the benefits of a healthy workforce.

• Determining the FTE of your company is crucial for its productivity.
• When a company expands into a new country, there are key areas where potential disruption and mistakes can occur.
• Staffing levels can have a significant impact on workers’ happiness and health because fewer hours spent working and fewer worries about getting everything done may result.
• Particularly due to the development in the part-time sector, your staff planning will be more comprehensible and controllable with this ratio.
• Regularly report information on minimum health insurance coverage to both employees and the IRS as part of their responsibilities under the ACA.