What Is FTE Full-Time Equivalent?

fte meaning business

This, therefore allows them to make better decisions regarding personnel management. Clockify is a time tracker and timesheet app that lets you track work hours across projects. 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, track project development, set deadlines, and work out your budget. An FTE calculation for all employees in a company needs to be rounded down to the nearest whole number (usually, 1.0 FTE or greater). Outside the business environment, this unit of measure is also used to measure a student’s class load or involvement in a school project.

A full-time position would equate to around 30 to 40 hours per week for most employers. If a company considers 40 hours per week as the basis for a full-time position, then anyone working an amount of hours below this range is considered a part-time employee. The same logic is applied if a company considers 30 hours per week as the standard for a full-time position.

What is the full-time equivalent (FTE)?

Day.io is a cloud-based time tracking and productivity tool that makes calculating FTEs for your business easy. It allows you to manage and monitor employee hours, generate detailed reports, and even set specific goals for your team. With Day.io, you can also compare the performance of different teams or projects over time and track progress against goals set by individual employees or the whole company. Let’s say that Sarah is a part-time employee who works 28 hours per week. Her company has a 5-day work week, and full-time employees work 8 hours daily.

  • Altogether, those 18 employees only account for the hours of 4.5 full-time employees.
  • In step 4, we learned that the total number of work hours for all employees in a single week equals 153.
  • Misinterpretation can potentially lead to incorrect tax filing and the risk of penalties.
  • With Clockify, you can easily track your cost rates per employee and then compare and contrast them with employee billable hourly rates.
  • When using FTE alongside other performance metrics, it can be easier to understand per-employee costs and output in a large organization.
  • Being a basic criterion in staff controlling, it is one of the most important staff indicators for companies.
  • Plus, knowing your company’s FTE count will help reduce overall costs by forecasting employee hours and salaries.

The expected length of a full-time schedule has changed a lot over the course of history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century. 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. One part-time employee who works ten hours per week and one part-time employee who works 25 hours per week.

Software and Tools for FTE Tracking

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). To determine this amount, ask yourself, what do you expect a full-time employee to work in terms of hours per week? The answer should be between hours a week per employee (when considering full time). Based on an FTE of 1.0, we calculate employees work 2,080 hours per year. Furthermore, this value is used only as a basis for calculating the annual FTE and reflects the hours of an employee who works 5 days a week, 8 hours a day.

fte meaning business

You can also use an FTE calculation to determine the appropriate pay for part-time workers. To identify the FTE for a specific part-time position, just divide the number of hours worked by the employee by the number of hours considered for a full-time worker. To identify https://www.bookstime.com/ 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.

Step 6: Calculate Your FTE

It’s an important element to accounting to determine employee wages, hours of service, and your company’s expenses. To determine your total FTE, add the total part-time hours worked, plus the total full-time hours worked. From there, fte meaning business 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 for all full- and part-time employees for the year.

  • The ratio of full-time to part-time employees impacts company culture, engagement, and retention.
  • So, 75 is the number of hours needed per day to finish the said 600-hour project.
  • In some cases, employers consider 37.5 hours a full-time work week because they don’t include the 30-minute mandatory daily break.
  • Using the same formula, the number of part-time hours worked amounts to 5,000 hours per year.
  • This influences their ethical standing in the market and aligns closely with their CSR commitments which often includes the framework for employee welfare.
  • My Accounting Course  is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers.

Leave a Comment