Join us on this webinar case-study to see how Vimeo was able to leverage the BambooHR and Boomr integration to simplify their workforce management and streamline their processes. An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position. The Paycheck Protection Program (PPP) provides funds for small business owners to help them cover up to 24 weeks of payroll or other costs such as utilities, rent, etc. Whether you want to calculate an FTE for an individual employee (part-time or full-time) or determine the FTE within your entire organization, take a look at the following calculations for further information.
What is a Full-Time Equivalent (FTE)?
You should also recognize the difference between FTE and an overall employee headcount. With a headcount, each employee counts as one, regardless of how many hours they work. This method of calculation is a common way of creating an accurate forecast.
Why is it important to calculate the FTEs?
So, in this case, you would add up all employee hours for the year and divide by 2,080. If your company considers 35 hours full-time, then you would adjust your calculation accordingly. If you work in human resources, you’ve probably heard of the term “full-time equivalent” (FTE). It is a unit of measurement that calculates how many full-time employees a business has based on how many hours employees work. The full-time employees work 40 hours per week and 52 weeks out of the year, meaning that the number of full-time hours worked on an annualized basis is 104,000 hours. To calculate the total FTE, add the number of FTEs worked by full-time employees (1 FTE for each full-time worker) to the part-time FTE you calculated in step five.
Is it better to have part-time or full-time employees?
For example, the Affordable Care Act in the United States requires applicable large employers to provide health insurance to employees working an average of 30+ hours (0.75 FTE). By adding the full-time and part-time hours worked, we can calculate the total number of hours worked by all employees for the year as 109,000. The FTE calculation counts part-time employees as a fraction of a full-time employee, most often on the basis of the number of hours worked. FTE, an abbreviation for “full time equivalent”, counts the approximate number of full-time employees employed by a specific company, but with the inclusion of part-time employees.
- Integrating FTE into budgeting and financial planning processes is a strategic approach that aids in the precise allocation of resources and enhances decision-making for businesses.
- Effective workforce planning is essential for the long-term success of your organization.
- 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.
- Therefore, before making a decision using the FTE metric, it is best to check if there are any rules or requirements worth considering.
- Keep reading to find out everything you need to know about calculating FTEs and how to use them.
- A full-time equivalent (FTE) is a unit of measurement used to determine the amount of full-time hours worked by all employees in an organization.
FTEs must comply with applicable laws and the budget allocated to each agency. In the event of voluntary separation incentive proposals, also called buy-outs, FTEs are adjusted one-on-one. Mr. Arora is an experienced private equity investment professional, with experience working across multiple markets. Rohan has a focus in particular on consumer and business services transactions and operational growth.
Our work has been directly cited by organizations including MarketWatch, Bloomberg, Axios, TechCrunch, Forbes, NerdWallet, GreenBiz, Reuters, and many others. We follow ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. Much of our research comes from leading organizations in the climate fte definition finance space, such as Project Drawdown and the International Energy Agency (IEA). Shaun Conrad is a Certified Public Accountant and CPA exam expert with a passion for teaching. After almost a decade of experience in public accounting, he created MyAccountingCourse.com to help people learn accounting & finance, pass the CPA exam, and start their career.
Knowing how to accurately calculate and strategically apply FTE analysis helps optimize staffing, forecast budgets, align talent strategy to business goals, and support employee retention. With the required inputs in place, we can arrive at approximately 52.40 FTEs by dividing the total hours worked by all employees by the total number of available work hours in a year. Employers can use FTE to evaluate their hiring capacity and current payroll, as well as for reporting purposes related to labor laws and employee benefit programs. When it comes to running a successful business, you always want to be as efficient as possible and cut costs wherever you can. Calculating your FTE highlights areas for improvement when it comes to project needs or employee hours.
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. These rates will depend on the PTO accrual rate policies of a company, organization, or institution. According to the US Bureau of Labor Statistics’s newest data from March 2024, private-sector US employees (excluding the farm sector) work 34.4 hours per week on average.
- A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week.
- Full-time equivalent enables managers to compare productivity between full and part-time workers, identify areas for improvement, and plan resources effectively depending on the project or the seasonality of work.
- Stay on top of FTE trends and leverage HRIS tools to master this essential workforce metric.
- FTE offers a comprehensive view of your workforce’s productivity and can significantly impact your organization’s efficiency and cost-effectiveness.
In contrast, non-exempt positions who typically work only 28 hours per week on a 0.75 FTE schedule do not qualify, even if the employer policy defines them as full-time. Whether an FTE of 0.75 is considered full-time will depend on the company policy made by the employer. If 0.75 FTE is considered full-time in a company, such employees may qualify to apply for the Public Service Loan Forgiveness (PSLF) program — eligible employees don’t have to pay out their federal student loans. Since both are considered to be full-time schedules in their respective companies, both count as 100% or 1.0 FTE. 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. In this step, you have to add the total work hours worked by each full-time employee and total working hours worked by each part-time employee.
With these tips, you can run a smoother business operation with a deeper level of understanding into your labor costs and needs now and in the future. For example, an employee who works a full-time, 40-hour week would equal 1.0 FTE. As would four part-time employees who each work 10-hours per week, totaling 40 hours. You can calculate FTE to determine how much a project will cost in terms of time and personnel needs. Whether you hire employees as part time or full time depends on your business needs and local regulations. A part-time workforce might save you money in wages and benefits but could, in turn, cost more in rehiring and training.