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. 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. First, let’s look at what full-time equivalent or FTE actually means. The full time 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.

What Is Full-Time Equivalent & How to Calculate It (+ Free FTE calculators)

While headcount planning can help HR work with managers and business leaders to build and scale the organization’s workforce, it does have some limitations. FTE and headcount as resource management methods have benefits and drawbacks, which will be unpacked further in the article. Such technology is already a part of many workplaces and will continue to shape the labor market and HR.

Challenges in FTE Management

This perspective allows for a more accurate budgeting process, as labor costs are often the most significant expense for organizations. 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. To qualify for PPP loan forgiveness an organization must have maintained the same level of FTE employees during certain specified time periods following the loan disbursement. Just indicate how many employees work at your company, how many hours they work a week, and for how many weeks. Our model will then instantly calculate the Full Time Equivalent for you.

• Whether you hire employees as part time or full time depends on your business needs and local regulations.
• Headcount is simple to calculate whether you want to determine the number of people in a particular department or over a set period (monthly, quarterly, annually).
• Whether an employer is an ALE under the shared responsibility provisions will depend on the size of the organization.
• Converting hours worked by part-time employees into full-time equivalents can be helpful when calculating these metrics.
• The Paycheck Protection Program (PPP) is a Small Business Administration (SBA) program to help employers retain employees during the public health and economic crisis.
• Key global rules affecting FTE include the Fair Labor Standards Act (FLSA), laws on working conditions, healthcare rules, union deals, tax and benefits laws, and data privacy rules.

What is Employee Efficiency Rate: How to Calculate and Improve It?

• This, therefore allows them to make better decisions regarding personnel management.
• A part-time worker who works half-time would be equivalent to 0.5 FTE.
• As you can see, the part-time employees are converted into the performance of a full-time employee.
• A typical or full-time work week usually consists of 40 working hours without paid or sick leave.

In the chart below, because both Carole and Lynn are full-time employees, they would each be counted as one FTE. However, determining the FTE for Jimmy and Marta requires calculation. If you’re concerned about staying compliant, consider software such fte meaning as Homebase that will track your employee hours, provide reporting, and can also prepare your time sheets for payroll. To determine your eligibility for the small-business tax credit, you’ll need to use a different system for counting FTEs.

An explanation of how FTE is calculated and the various ways in which a business can use this metric when forecasting and budgeting. If you want to save time, why not use our free full time equivalent calculator template for excel to easily work out your company’s FTE. Join BambooHR and League to explore how to go beyond wellness resolutions so your organization https://www.bookstime.com/ can reap all the benefits of a healthy workforce. Knowing your FTE number is also helpful for determining if your organization is eligible for certain benefits programs, such as the Small Business Health Options Program (SHOP). There are different methods for calculating FTE, depending on the organization’s needs and the complexity of its workforce.

• A full-time employee (working 40 hours per week) is equal to one FTE; a part-time employee (working 20 hours per week) is equal to 0.5 FTE.
• A part-time employee who works 10 hours per week would have an FTE of 0.25.
• If you’re offering health coverage to remote workers, there may be some additional considerations.
• News, trends, analysis and breaking news alerts to help HR professionals do their jobs better each business day.
• In this article, we will explore the meaning of FTE from a U.S. perspective, how it is calculated and the purposes of doing so as an employer.
• So, if your standard work week consists of 40 work hours, your employees probably work 8 hours per day.

Determine Which Employees Are Full Time vs Part Time

• Altogether, those 18 employees only account for the hours of 4.5 full-time employees.
• 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.
• FTE is used in budgeting to estimate labor costs, allocate resources, and determine staffing needs based on workforce capacity.
• If an employer has a 40-hour workweek, a worker scheduled for 40 hours per week is 1.0 FTE.
• However, you’d want to average those hours over a time period such as four months.