Full Time Employee vs Full Time Equivalent MetricHQ

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. Moreover, having accurate FTEs for all employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs. To calculate FTEs and see if you qualify for tax credit, you can choose one of the said methods (we’ve provided calculators for each). If you, for instance, choose the first method, enter all the actual hours worked and divide that number with 2,080 to get the final FTE. If you are such an employer, then you are eligible to apply for a tax credit in the amount of 50% of employer-paid health care premiums. To calculate the full-time equivalent for part-time employees, add up their work hours and divide that number by 120. According to OECD statistics on average weekly hours worked on the main job from 2021, Denmark has an average of 33.7 hours per week compared to Columbia and its average of 47.8 hours during a workweek.

• A part-time employee who works half-time (according to the employer’s or regulator’s definition of full-time weekly hours) is .5 FTE.
• Her company has a 5-day work week, and full-time employees work 8 hours per day.
• Anything is possible with the most powerful work management software at your fingertips.
• In some cases, employers consider 37.5 hours a full-time work week because they don’t include the 30-minute mandatory daily break.

In the past, if agencies were given a ceiling on the actual number of employed workers, which was reported on a given day of the year, the agency could employ more than this number for much of the year. Then, as the reporting deadline approached, employees could be let go to reduce the total number to the authorized ceiling on the reporting date. Using time tracking software, like Homebase, will allow you to run a historical report based on employee work history and status to gather the average hours worked using custom fields. In addition, Homebase provides small business employers with a range of scheduling options to ensure your staff hours are within the correct range. If you run payroll weekly, you’ll likely have this data available. But if you pay monthly or semimonthly, you may have to divide the number of available work hours in the month by the number of hours the employee worked, on average, to calculate your actual FTE. For the purposes of calculating FTE, most employers consider a full-time employee one who works between hours a week.

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

fte meanings are important for checking HR metrics and determining tax statuses for your business, but luckily they’re pretty easy to calculate on your own. Keep reading to find out everything you need to know about calculating FTEs and how to use them. For full-time employees — Each employee who worked more than 40 hours per week on average during a specific calculation period counts as 1.0 FTE. For full-time employees — Each employee who worked 40 or more hours per week on average, during a specific calculation period counts as 1.0 FTE. No employee can be greater than 1.0 FTE, as overtime is not counted for this calculation. They also use it to calculate labor costs for the expected project workload and subsequently define the funds needed to finish a project. A full-time equivalent is a unit of measurement used to determine the amount of full-time hours worked by all employees in an organization.

So, 75 is the number of hours needed per day to finish the said 600-hour project. However, it will be up to you to decide how many people you’ll want to employ to carry this out and what type of employment you will offer them. Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle while federal programs use different FTE calculation methods. FTEs may also influence how many hours employees can accrue for PTO. The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an employee’s hourly PTO accrual rate. These rates will depend on the PTO accrual rate policies of a company, organization, or institution. However, bear in mind that this only applies to positions that work 30 hours per week when assigned a 0.75 FTE position, i.e., the IRS minimum for a full-time definition.

How to Calculate FTEs

Yearly, a company generally considers an FTE to be valued at 2,080 hours. To delve further into the matter, let’s look at how FTEs are calculated. FTE is a very specific term used to calculate whether a company is required to provide benefits under the Affordable Care Act and the Family Medical Leave Act , for example.

If you’re trying to determine whether or not you’re an ALE in the United States, you should use the IRS’s minimum of a 30-hour work week in your calculation. The IRS taxpayer advocate service has created an estimator that can help with this calculation. For example, say you run an ice cream van five hours per day, four days a week . Employers can use FTE to guide their hiring strategy and plan for a project, while governments often use the metric to determine program eligibility.

How Do You Calculate Full-Time Equivalents?

But if the number of working hours is a variable component, if you hire new people to your company, the calculations will be more complex, and the total FTE will vary from week to week. In the last step, just divide the total number of hours of full-time employees and part-time employees by the number of regular full-time hours to generate the full time equivalent for a certain period of time.

Your average number of full-time equivalent employees during the reference period was 5. Divide the total part-time employees’ hours by the total hours an employee must work to be full time . Add together your full-time and FTE part-time employees to get your total full-time equivalent employees. 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. The FTE salary is an employee’s salary converted into a full-time equivalent wage within the year.

Examples of how to calculate FTE for all employees

You are subject to employer shared responsibility if you have at least 50 FTEs on average during the previous calendar year. Affordable Care Act rules state full-time employees are employees who work at least 30 hours per week or 130 hours per calendar month. An FTE is a measure of how many employees are equivalent to a full-time worker. To calculate it, take the total hours worked by all part-time employees and divide it by the hours worked by full-time employees. FTEs can help identify the number of full- and part-time workers an organization can hire, as well as the number of hours they should work. This is useful when determining employee outputs as schedules and budgets for part-time employees continue to change. All the above-mentioned factors end up costing the company something and affecting its bottom line.