By calculating your FTE, you’ll be able to get information on the overall productivity of all your employees (within a team, department, or entire company). Next, divide the above number by the ideal number of work hours for a full-time employee per month. Add the full-time FTE (in this case, it’s 2.0 since there are two full-time employees) to the part-time FTE from the previous step (1.5).
- So, whether you’re a business owner, HR professional, or just curious about how work can be measured, understanding how to calculate FTE is a crucial part of effective workforce management.
- If you’re trying to determine who is full time and part time for ACA purposes, use 30 hours per week as the criteria for a full-time employee.
- In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters.
- FTE or full-time equivalent is a tool to help you gauge the potential productivity of your business or company.
- In general terms, full-time equivalent (or FTE) is a unit of measure that plays an important role in calculations used in businesses, project management, or federal programs for eligibility purposes.
Considering that the FTE unit of measure is based on the total number of hours worked — it may not indicate the actual number of people working in a company. Full Time Equivalent (FTE) 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. 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. To find the equivalent of a full-time day, divide the total number of hours by 8.
How Do You Work out the FTE?
When calculating your FTEs for basic accounting or business purposes, the simplest way to do it is to divide total annual work hours for all employees by an average full-time annual work schedule. The total hours worked is the sum of the number of hours worked by part-time and full-time employees, whereas the number of available full-time hours in a year is most frequently 2,080. Now determine the number of hours worked by full-time employees over a given period. Full-time employees are those who work a minimum of 30 and a maximum of 40 hours a week and more than 120 days a year.
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 (eight hours a day x five days a week). Analyze your upcoming projects/seasons to determine how many FT hours you’ll need to ensure successful completion. You can use your resource management tool to adequately divide your workforce (or bring more people on). 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 for this credit is that the business must have 25 or fewer FTEs.
Step 1: Make a List of All Your Employees
To calculate the full-time equivalent in your company for each employee, you’ll need to account for the hours of a full-time weekly schedule and the actual hours your employees are scheduled to work. Therefore, eligible employees may obtain affordable and minimum health insurance coverage thanks to FTE calculations under the Affordable Care Act. Any employee having at least 30 working hours per week (or 130 a month) is considered a full-time employee under this act. All the above-mentioned factors end up costing the company something and affecting its bottom line. You can also use an FTE calculation to determine the appropriate pay for part-time workers.
If you’re worried about salaries and benefits, you can use FTE calculations to learn what you’re currently paying those working full-time hours. FTE is important for calculating labor costs incurred by fte meaning your company. By determining your company’s overall FTE, you can plan in advance and manage your payroll expenses. There are numerous reasons why calculating FTE can prove meaningful to your company.
How to calculate FTE for one employee?
To determine your total FTE, add the total part-time hours worked, plus the total full-time hours worked. From there, if your full-time hours are 40 per week, divide the number by 2,080. If your total full-time hours are 30 per week, divide the number by 1,560. This will give you your total FTE https://www.bookstime.com/ for all full- and part-time employees for the year. You can use the FTE total each week, month, or year to determine company growth. You can also use the FTE total to remain compliant with federal, state, and local labor laws that may be based on employer size such as mandatory sick time laws.
