FTE Meaning: What Does FTE Mean In Business?

Full-Time Equivalent means the equivalent number of full-time students attending a post secondary school such as a trade school, college or university. Let’s review what FTE means, why it’s essential, and how to use it for resource management. The full-time equivalent is an indicator that answers many of the questions Human Resources departments need answers to.

• Say a full-time graphic designer at a company makes 48,000 dollars a year, amounting to around 923 dollars for each workweek.
• However, they must consider specific instructions provided by programs as well, if any.
• Divided by the standard 40-hour work week, this would be equal to 2.5 FTEs— so you know that you will need two full-time workers and one part-time worker, or another combination of workers that adds up to 2.5 FTEs.
• One of the most common yet often perplexing compliance concerns HR teams encounter is calculating FTE, or full-time equivalency.
• Full-time employee means a person engaged to work for the full ordinary hours prescribed.

Knowing how many full-time equivalent employees you have is beneficial for several reasons. For one, it makes planning resources and workloads across full and part-time staff easier. Maybe your team needs extra help from temporary workers or new hires. Or perhaps some of your part-time employees can put in additional hours to pull the weight of a larger project. Full-time equivalent is a way for employers to standardize their headcount and combine their part-time workers’ hours to figure out how many full-time employees would work those hours. Making strategic decisions based on FTEs instead of actual employee headcount allows companies to simplify the payroll complexity of a multi-status workforce (full, part-time, and contract workers) and make more accurate budgeting forecasts. By comparing that figure with industry averages the company can analyze its current productivity.

Examples of how to calculate FTE for individual employees

For example, a business might state, “Our standard work hours are Monday to Friday from 8 a.m. – 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours . For example, you may have one staff member working 30 hours a week, another working 50 hours a week, and a third who worked 40 hours a week.

As evident, once you have the total number of hours per day, you’ll be able to pick whatever days/employees ratio you want to carry out the estimated workload. However, if your company employees part-time employees as well, several of them together may equal 1.0 FTE. Considering that both count as a full-time schedule in their respective companies, both count as a 100% or 1.0 FTE. This is how a company, on average, calculates the average yearly number of hours that a full-time employee works. Full-Time Equivalent means the decimal equivalent value of a position. 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.

Examples of how to calculate FTE for all employees

Needs to review the security of your connection before proceeding. Full-Time Equivalent PositionA permanent state position that counts against an agency’s position limitation authorized by the Legislature. Keep track of every penny, hour, and PTO request without breaking a sweat. Save time, save trees, and track every signature down to the minute. Say goodbye to filing cabinets, and say hello to secure, centralized, and organized employee data. Now that we’ve got that out of the way, let’s take a look at how to calculate FTE.

• For the purposes of these provisions, a full-time employee is considered to be an employee who has worked, on average, at least 30 hours per week during the calendar month or has worked at least 130 hours during the calendar month.
• Maybe your team needs extra help from temporary workers or new hires.
• What’s important is that “on average” they work under 30 hours a week.
• 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?

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. FTE stands for full-time equivalent and measures how many full-time employees an organization has. 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.

How to plan FTE resources

Meanwhile, a part-time or contract graphic designer at the same company works 22 hours per week. Now to figure https://quickbooks-payroll.org/ out their FTE salary, simply multiply their FTE by the full-time employee’s yearly and weekly salary.

Before discussing how to calculate it, it is crucial to define it. For example, if two part-time employees each work four hours per day for 10ten days apiece during a weekly pay period, their 40-hour combined total represents 1.0one FTE on the company’s payroll for that pay period. What’s important is that “on average” they work under 30 hours a week. To get a good estimate, it’s best to average hours over a 90- or 120-day timeframe. In addition, if you’re calculating FTE for ACA purposes, you’d only include the part-time person in your calculations if they worked 120 days or more per year.

Examples of the Calculation of FTEs

With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year. When a business employs a significant number of part-time staff, it can be useful to convert their hours worked into full time equivalents, to see how many full-time staff they equate to. The fte meaning FTE concept is used in a number of measurements that compare headcount to revenues, profits, or square footage. The concept is also useful for comparing headcount levels among the firms within an industry, as part of an industry analysis. Once they do so, they can calculate the number of full-time hours.

• In other words, do you know what the full time equivalent is and how it can help you better understand the needs of your organization?
• In the end, round this down to the nearest whole number , and add the 2 full-time employees to get the final FTE .
• For example, if an employee has an FTE of 0.80, multiplying that number by 40 means that an employee works 32 hours a week.
• Identifying full-time staff is not as easy as saying, “You work 40 hours a week.
• Small businesses are eligible for small-employer health care tax credit — they apply to employers who employ less than 50 full-time equivalent employees.