FTE or Full-time Equivalents
Converting staff to FTE also helps when comparing the company’s headcount levels to other, similar firms within their industry, as a part of their overall industry analysis. The Texas Legislature assigns each state agency an FTE cap for each fiscal year.
Method 3 of 3: Obtaining and Using Professional FTE Calculations
What does FTE stand for in employment?
An FTE is the hours worked by one employee on a full-time basis. The concept is used to convert the hours worked by several part-time employees into the hours worked by full-time employees. On an annual basis, an FTE is considered to be 2,080 hours, which is calculated as: 8 hours per day. x 5 work days per week.
Both Carole and Lynn in our example above would be full-time employees under this example. Your 10 part-time employees work 25 hours a week, for a total of 250.
Is your company made of worker bees or dolphins?
FTE stands for full-time equivalent (not full-time employee) and translates the total hours worked by part-time employees into the number of equivalent full-time employees. Tracking FTE is a typical way employers monitor employees’ workloads so future budgeting and staffing can be properly planned for. To calculate FTE you have to know how many full-time and part-time employees you have, and the average number of hours they work. You can then determine the equivalent number of full-time workers you employ. And that system will consider full-time employees as those who work an average of at least 30 hours a week for a minimum of 120 days a year.
FTE analysis can be a useful tool for assessing how many employees are needed in a certain part of a business or in total. Business owners can also track how overall employee growth has trended over the years in a clearer way by analyzing FTE changes. This type of calculation is best if you want to know how big your company is, or to see how it has grown. To keep the show running, you employ a staff of 40 full-time employees and 20 part-timers.
What is Full-time Equivalent (FTE)?
Each of your 15 full-time employees works 2,080 hours per year, which comes to 31,200. You will need both your total number of full-time employees and the hours worked by your part-time employees.
To calculate FTE, identify the total number of hours worked by part-time employees during a particular time period. Then, calculate the total number of hours worked by full-time employees for that same time period. Add the hours worked by full-time and part-time employees together, then divide that number by the total hours worked by full-time employees to determine the FTE for that particular period.
- FTE stands for full-time equivalent (not full-time employee) and translates the total hours worked by part-time employees into the number of equivalent full-time employees.
- Tracking FTE is a typical way employers monitor employees’ workloads so future budgeting and staffing can be properly planned for.
This information should be readily available in your accounting records. Remember that full-time employees are those who work more than 30 hours per week. When a company has mainly part-time employees, budget analysts convert their total hours worked into a FTE basis, to find the number of full-time staff to which they would equate. They can then use this FTE-converted data for several financial analytics, such as comparing headcount to profit, revenues, or per-store square footage.
SHOP is a wonderful resource for your employees, pertaining to benefits, but employers must first know the FTE of each employee. The term full-time equivalent, or FTE, is used in many contexts in employment situations. It is sometimes useful to know how many full-time and part-time employees are working in a business.
An easy way to remember FTE is that it’s the typical full-time hours a full-time employee would be working in that firm. For example, if full-time employees in your company work 40 hours a week, then a 0.5 FTE position or employee in your company would be expected to average 20 hours a week.
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. In our example, Jimmy and Marta would be considered part-time employees. Imagine you run a fidget spinner company with 15 salaried employees and 10 part-time employees. Your salaried staff members work 40×15, a total of 600 hours a week.
(This number is typically between hours a week.) We’ll use 40 hours as our answer, since that’s pretty common. 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.
Each of your part-time employees works ten hours a week selling tickets and snacks, while your full-timers cram in an average of 30 hours a week on marketing, business development, and other showbiz-related tasks. To determine your eligibility for the small business tax credit, you’ll need to use a different system for counting FTEs. First, count the total number of employees who worked at your company at any time during the year, both full-time and part-time. One works 40 hours a week (full-time), the other two work 25 and 30 hours a week (part-time). The simplest calculation is to add up the total hours worked by all three employees and divide that total by 40.
Identify all current full-time employees who worked for the entire past 120 days (four months), and averaged 30 more hours a week during that time. (Each full-time employee is equivalent to one FTE.) For example, if you had 35 full-time employees, then that equals 35 FTE. For example, if full-time in your company is 30 hours, then every employee who works 30 hours a week or more is considered full time. This definition is the most commonly used to determine how many FTE you have for ACA purposes.
But some part-time employees work different hours, and they must be included in the calculation of the number of full-time employees. FTEs are calculated in different ways in different federal programs for eligibility purposes. When used for ACA purposes, FTE is a very specific term used to calculate whether a company is required to provide benefits, for example. If your company has 41 full-time employees and 20 part-time employees who each work 20 hours a week, it would be a mistake to say it has 41 FTE. In fact, it has 51 FTE and would be required to offer benefits.
Method 1 of 3: Calculating FTEs
If an agency has an FTE cap of 100, that agency can employ 100 full-time employees, or it can split some of the jobs into part-time positions. If the agency had 10 positions it could logically split among more than one part-time employee; the agency could have 20 people working 20 hours per week to fill those 10 FTEs. Determine the number of hours full-time employees are paid for.