The calculation of full-time equivalent FTE Cove tool Help Center

FTE has several different uses and several different calculation methods, depending on why you want to calculate it. It will help you plan your project work, set deadlines, and work out your budget. Within this method, the employee is credited with 40 hours for each week when payment was due (including PTO). To calculate the number of hours your employee is expected to work based on their FTE, you’ll need to reverse the previously mentioned process of calculating FTE based on the number of hours worked. When classifying FTEs and working hours in your company’s policy, you can follow suit, or define your own FTE measurements. Those five workers are in fact equivalent to 3.37 full-time workers.

In contrast, a part-time employee working only 20 hours per week would have an FTE of 0.5—which shows that their hours worked are equivalent to half of a full-time employee. Some are part-time workers, others only work during certain months of the year, others have flexible schedules, others work during one project, and so on. Headcount is the total number of employees working in your company, including part-time and full-time workers. They are not measured in fractions or percentages — one employee is equal to one employee, no matter how many hours that employee has worked throughout the year.

What does FTE mean?

You need to understand hours worked for financial processes, like billing and budgeting. A resourcing strategy equips your organization with the people and skills you need to succeed. Here’s how to write a resourcing strategy that secures the talent advantage for your project business. In simple terms, 100% FTE equals 1.0 FTE — it might be used to identify an individual employee who’s working full-time or a few people who work the equivalent of one FTE.

Calculating headcount is good for creating organizational strategies and setting goals, but it doesn’t give you specific insight as FTE does for data like departmental labor. Simply enter the number of full-time employees, then add up all the hours worked by part-time employees (for the previous week), and don’t forget to enter the hours of your standard workweek (which is generally 40). 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.

Define the number of hours for a full-time position

Full-time equivalent, or FTE, measures the total amount of full-time employees working at any one organisation. 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. To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker. In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A. To identify the FTE of part-time employees, divide the total hours worked by part-time employees by the annual hours worked by one full-time employee (i.e., 2,080 hours).

Many AI platform companies hire contract employees for several projects. Independent contractors or 1099 workers do not count toward ALE. You should also leave out any employees who work outside the U.S., leased employees, and workers who hold positions like direct selling or commission-based agenting.

Now let’s talk about other acronyms with numbers… FTE 100%. What is that?

To calculate the FTE for all employees in your company, consider the full-time and part-time employees you employ. 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.

You can work out the Full-Time Equivalent by dividing an employee’s scheduled hours by the employer’s hours for a full-time workweek. Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total. 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. FTE value helps in indicating the number of full-time employees that a company shall employ in a year or the number and type of employees needed to complete a project. Once you have this information, you can determine how many part-time employees are equal to a full-time employee in terms of FTE.

FTEs under the Affordable Care Act (ACA)

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. Calculating FTEs will also determine an employer’s duties under the shared responsibility provisions of the Affordable Care Act. For example, a project that is estimated to take 600 hours of work can be accomplished in a variety of ways depending on your allocation of staff and time requirements.

Since there are 52 weeks per year, this equates to an average full-time employee having the opportunity to work a total of 2,080 hours. This number doesn’t reflect sick leave, paid time off, seasonal assistance, or paid overtime. It also doesn’t give you any insight into how those numbers break down across departments and individuals.

In this case, the calculation may show that the first professional is overqualified for the position, whilst the other needs more training and development. In general, it is a valuable tool that can provide many benefits. Request a proposal today to learn more about our international payroll services and how we can help you manage and grow your stock global team. There are differences between FTE, headcount, and hours worked. You can repeat this formula weekly, monthly, quarterly, or annually for more specific insights. If you have at least 50 FTEs employees, you are an ALE for the year, which means you are subject to specific reporting requirements and share responsibilities under the ACA.

Full Time Equivalent is frequently used to assess an employee’s workload and its contribution to a project, or to track cost savings in a company. The definition of Full Time Equivalent in salary is necessary for accounting, as well as calculating the company’s costs while compensating its employees. This is how a company, on average, calculates the average yearly number of hours that a full-time employee works.