What a full-time equivalent is and how to calculate it

FTE refers to one full-time employee or the equivalent of a full-time employee. Read our employer’s guide to find out more about how to hire employees in Europe, Asia, Africa, or elsewhere. An explanation of how FTE is fte meaning calculated and the various ways in which a business can use this metric when forecasting and budgeting. Time estimation in project management guide Improve your time estimation in project management with our guide….

If a normal work week consists of 40 hours, an employee who works for 40 hours per week has an FTE of 1.0 while a part-time employee working only 20 hours per week has an FTE of 0.5. According to the Affordable Care Act , employers with 50 or more FTEs are required to offer ACA-compliant benefits. The ACA defines a full-time employee as someone who works 30 hours per week or 130 hours per month. If your company considers the number of hours for a full-time position as 40 hours per week, note that working 30 or more hours counts as 1 FTE for purposes of ACA compliance.

Calculating FTE for ERC

This can be done by hiring more people, giving current employees more hours to work, or putting in place better processes and technologies. Other things that might be taken into account are how many vacation days or paid time off employees take, as well as any other types of leave that might change the number of hours worked. You should also think about how many part-time workers you have and how many hours they work. Divide your total hours by 40 hours to get the number of full-time equivalent employees for the week. To find out if you have an average of 50 full-time equivalents for the calendar year, simply add together your total FTEs per month and divide your total by 12.

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. To calculate an FTE (full-time equivalent) wage, take the employee’s annual salary and divide it by the number of working hours per year. This measurement tool is really essential and critical when it comes to calculating and deciding on wages, also the costs of these payments when the wages are given to the employees.

Steps

As you will understand by the end of this article, there are plenty of situations in which knowing the meaning of FTE and how to calculate it can be quite useful. Setting an error budget allows teams to prioritize items that are more vital to the product’s success and ensuring that they are produced with a greater level of reliability. Keep in mind, however, that the specific strategies that may be most useful are depending on the organization and the industry. The workplace can become more creative and productive when more individuals collaborate, share ideas, and build on one another’s work.

• Hours worked are just like they sound — how many hours an employee has worked.
• Divide the total hours worked by the number of full-time hours for the given time period to find the FTE.
• There are some exceptions when calculating FTE for the purposes of the small business tax credit.
• If eligible, employers may receive a tax credit of up to 50% of the wages paid.

HR departments use FTE salaries to determine part-time workers’ salary compensation. A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee. Say a full-time graphic designer at a company makes 48,000 dollars a year, amounting to around 923 dollars for each workweek.