This calculation can be very confusing if you’re not used to it, so to make things as clear as possible, let’s look at an example for calculating the FTE of a single employee. However, this formula has a few variations, depending on what you want to include. For example, you can choose to include only paid hours or both paid and unpaid hours (such as overtime). This is because the purpose of an FTE is not to see how many employees you have, but rather to measure the amount of work that’s being done. In other words, it allows you to compare different types of staffing arrangements on a level playing field.

• Legal and regulatory requirements can influence the choice between FTE and hours.
• Depending on the type of work that is required, management can decide the number of full-time employees that are needed for a particular project and assign employees to those positions accordingly.
• It shows the number of work hours of an employee compared to a full-time employee.
• One option is to bring on a part-time employee on a full-time basis temporarily.
• Full Time Equivalent (FTE) 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.
• You could choose to assign six full-time employees and one part-time employee to work on the project for 10 days.

Gauging the resources’ availability, scheduling, and keeping track of their utilization is key to accurate resource management. The FTE is used to determine how much paid time off employees can take, and different organizations have different policies regarding PTO. It can also do the same for a full-time employee who hasn’t completed a whole year of work yet. Do you want to calculate how much hiring an employee abroad will actually cost you? Use our employment calculator to get an estimate of your overall costs for employees in different countries.

FTE Mean In Business: Full-Time Equivalent

For example, if an employer considers 40 hours per week as full-time, employees who work 40 hours each per week count as 1.0 FTE, while those that work 20 hours per week, or part-time, make 0.5 FTE. In this case, two part-time workers would count as 1.0 FTE, and four part-time workers would count as 2 FTE. Various combinations can be created depending on the needs of the business. To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker.

Two of these employees worked full-time (40 hours per week), employee three worked 20 hours per week, and employee four worked 15 hours per week. In general, full-time means an employee who works 40 hours per week, although this can vary depending on the organization. 100% FTE or 1.0 FTE refers to one full-time employee or a number of people who make up the duties of one full-time position. Essentially, 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. Employers can use an average number of FTE employees for each pay period falling within a month.

What is a Full-Time Equivalent (FTE)?

Seeing a value of FTE 100% means a single full-time employee or multiple part-time employees work those full-time hours. 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 https://www.apzomedia.com/bookkeeping-startups-perfect-way-boost-financial-planning/ is actually part time. With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year. 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.

Alternative measures of FTE that incorporate these additional assumptions can place the number of hours for one FTE as low as 1,680 hours per year. The exact number will depend on the country where the employment is occurring, since the number of holidays varies by country. As you can see, calculating FTE is essential for many reasons—from abiding by employment laws to accurately planning team resources. It makes planning for projects and upcoming seasonal changes easier when you know how much capacity your team has.

Checking an employee’s FTE with Clockify

Full-time equivalent, or FTE, measures the total amount of full-time employees working at any one organisation. It is a way of adding up the hours of full-time, part-time and various other types of employees into measurable ‘full-time’ units. The Paycheck Protection Program (PPP) is a Small Business Administration (SBA) program to help employers bookkeeping for startups 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. 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.

Full Time Equivalent is frequently used to assess an employee’s workload and its contribution to a project, or to track cost savings in a company. The definition of Full Time Equivalent in salary is necessary for accounting, as well as calculating the company’s costs while compensating its employees. If a company has work schedule of 40 hours a week, the employees expected to work 40 hours per week are 1.0 Full Time Equivalents.