The calculation of full-time equivalent FTE Cove tool Help Center

This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. Add the total hours worked by part-time and full-time employees. Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.

With the variety of working options available today some employees may work part-time while others may only work at certain times of the year or in several other flexible ways. This metric provides a useful way to measure all of the hours worked by each type of employee thereby helping businesses organize their headcount more effectively. 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. For example, a pizza shop employs 5 workers who work the following average working hours excluding employees who are on leave, paid time off and sick leave.

FTE Meaning: Final Words

Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5. In its most basic form, FTE is calculated by dividing the total number of hours worked by full-time employees by the number of hours worked by all employees. 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. After all, the net costs of hiring additional part-time employees may in fact be lower than the more visible cost of overtime pay for existing staff, and FTE is used to uncover such findings.

This is https://1investing.in/ if an employee has made 120 qualifying monthly payments while working as a full-time employee . Calculating the FTE may help you receive forgiveness regarding your student loan debt. In this particular case, your FTE must be 1.0 or 0.75 as the minimum requirement. Horizons can support your business by helping you hire full-time employees anywhere in the world. Whether you are looking to expand your business internationally, outsource your operations, or take on more remote staff contact us today to discuss your needs. The FTE is calculated by taking into account the number of hours worked in a full-time weekly schedule and the actual number of hours employees work.

FTE salary is most often used by companies rather than individuals. It indicates what a company could spend on a part-time employee if they worked full time. A full-time equivalent assists in tallying work hours, salaries, employee productivity, and company’s or workplace’s productivity, as well as calculating how much time an assignment or a project will take. Let’s say you determine that 1 FTE equals 40 hours of work per week. Then you should define which employees are working full-time and which are part-time.

How Horizons Can Help You Hire Full-Time Employees

A business’s FTE of its employees, or similarly, a school’s FTE of its students, can impact several areas. The FTE definition refers to the number of hours of work of a full-time employee. Jennifer Hartman has more than 20 years of writing and content experience, working with small businesses and Fortune 100 companies. For over a decade, Jennifer worked as an HR generalist, providing expertise in accounting, payroll, and HR by implementing payroll and benefits best practices and creating onboarding and employee-relations documentation.

Companies with an average FTE below 100 receive tax relief based on all employee wages, while companies with an average FTE above 100 receive tax relief based on wages paid to employees who were not working. The Employee Retention Credit is another measure designed to incentivize employers to keep hold of staff during the COVID-19 pandemic. It comes in the form of a tax credit worth half of employee wages over the course of a covered period. We’ll assume that where you are, full-time employment means working 8 hours a day, 5 days a week, for 52 weeks a year.

Create a list of the company’s employees and the number of hours spent by each of them

To calculate the total FTEs for your business, you need to add up the hours worked by all employees, both full-time and part-time. In a nutshell, FTE is an acronym for full-time equivalent — a figure that reflects the number of full-time workers in your company. Before we delve into how to calculate it, there are a few important points to note.

Many AI platform companies hire contract employees for several projects. Let’s imagine that the expected project duration is 1280 hours, while the 1 FTE in our case is 40 working hours. Therefore, every team member can spend 8 working hours per day on this project.

What is FTE (full-time equivalent)

The calculation is straightforward — enter the number of full-time employees together with the total number of hours worked by part-time employees per week. The calculator will tell how many full-time employees that represents and whether or not you are an Applicable Large Employer. To calculate the full-time equivalent for part-time employees, add up their work hours and divide that number by 120. As you can see from the example above, you can easily calculate how many full-time equivalent employees you need to hire to successfully complete a project.

• 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.
• All you need to do is enter how many hours of work are required to complete the whole project , and then how many hours a day your employees will work on that specific project.
• 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.
• This is applicable if an employee has made 120 qualifying monthly payments while working as a full-time employee .
• In this way, scheduling projects based on the FTE calculation allows for greater accuracy in workforce planning and the efficient allocation of resources.

Prior to joining the days sales in inventory at Forbes Advisor, Cassie was a Content Operations Manager and Copywriting Manager at Fit Small Business. Monique Danao is a journalist and freelance writer who has worked with several startups and tech companies. Her work has been published in Sitepoint, Fast Capital 360, Social Media Today, WPMayor among other publications. Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.

For small employers, calculating FTEs can help them determine if they are eligible for a tax credit worth 50% of their paid health care premiums. This is dependent on the company policies as few employers might recognize 40 hours/week and above as full-time. Generally, employers consider a full-time employee to work between hours a week. As per the IRS and the ACA, part-time employees work less than 30 hours a week on average.

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. If the company considers 30 hours as full-time, an employee working 30 hours would be a full-time equivalent employee. If a company considers 40 hours as full-time, an FTE employee would be someone who works 40 hours, or two employees working 20 hours would be considered 1.0 FTE. An FTE employee is someone who works the equivalent of the company’s full-time hours and is counted as 1.0.

It also helps you track any changes to your project’s workload and personnel needs as time goes on. Divide the number of hours an employee works by the number of FTE hours. Sign up to receive more well-researched human resources articles and topics in your inbox, personalized for you. 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.

You might have a designer, a developer, and a tester on your team. If each of these workers works 40 hours per week, then you are already meeting the FTE requirement. However, if one of them only works 20 hours per week, then you will need to bring in another part-time worker to meet the FTE requirement. When it comes to staffing, one of the most important metrics is the number of full-time equivalent employees, or FTEs.