First, count the total number of employees who worked at your company at any time during the year, both full-time and part-time. Under the ACA, certain small businesses are eligible for a small-business tax creditto help with the costs of offering health benefits to employees. One qualification https://www.bookstime.com/articles/trust-accounting-for-lawyers for this credit is that the business must have 25 or fewer FTEs. Full-time equivalent is a measure that shows how many full-time equivalent employees a certain company employs. This helps you compare and analyse the amount of work being done, even if your employees work odd hours.

Make a List of All Employees & Hours Worked

For example, you might have three part-time employees whose total hours are equivalent to the hours worked by one full-time employee. FTE stands for full-time equivalent and is used by businesses to calculate the total number of full-time hours worked within their business among all employees. 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.

Calculating FTEs for Standard Accounting

• Srijitha Ashok began her career as a software developer following her graduation .
• Full-timers often identify more closely with company mission and values.
• As long as the employee’s hours add up to 40 hours per week, it doesn’t matter what hours and days they work.
• Find out about manufacturing costs and their types, and gain insights with examples.
• 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.
• Employers can also monitor workloads for future budgeting and staffing with FTE.

However, external contractors and freelancers are generally not included in the FTE count. Integration of FTE data with workforce analytics enhances strategic decision-making, providing insights into workforce dynamics, trends, and performance metrics for effective planning and execution. Companies use full-time equivalent (FTE) measurements because they provide a standardized way to evaluate and compare the workload and contributions of employees, even when their work hours vary. Cassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Prior to joining the team at Forbes Advisor, Cassie was a content operations manager and copywriting manager.

How is FTE calculated?

To easily calculate your employees’ FTE, try out Clockify — a time tracking tool that can also be of great help for identifying your employees’ FTEs. Whether an FTE of 0.75 is considered full-time will depend on the company policy made by the employer. All you need to do is enter how many hours of work are required to complete the whole fte meaning project (estimated time) and then how many hours a day your employees will work on that specific project. This way, you will be able to determine the number of full-time equivalent workers in your company even when you have part-time workers on-site. First and foremost, make a list of all your employees within an organization.

• For example, if your full-time employee is obligated to work only 30 hours a week, you should use that number in your calculations instead of 40, as in our case.
• Now, the exact number of hours that a 100% FTE represents will depend on your company’s policies and the various labor laws in your state, country, and more.
• 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).
• 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.
• It also keeps part-time workers from going over their allotted hours each month.
• Our model will then instantly calculate the Full Time Equivalent for you.

Understand how accurately gauging FTEs can optimize staffing, predict budgets, and support employee retention – a must-read for every modern HR professional. There are different methods for calculating FTE, depending on the organization’s needs and the complexity of its workforce. Do you want help with the management of your company’s key figures, helping your team make the right decisions, and implementing the right measures in personnel planning? This is typically done based on the number of hours worked a week. This formula can be modified to calculate the FTE of a single employee, as shown below.

Productivity

How To Calculate FTE for Better Resource (And Budget) Management