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 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 Full time equivalent A. 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. A full-time equivalent (FTE) — also known as a whole-time equivalent or WTE — represents the sum of all full-time hours employees work in a certain company.
Determining the FTE of your company is crucial for its productivity. Imagine that, with the same FTE, an employee can deliver 100 units, while another only delivers 30. In this case, the calculation may show that the first professional is overqualified for the position, whilst the other needs more training and development.
Gives insight into organizational costs
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. A typical full-time schedule is 40 hours per week, 52 weeks per year, which totals 2,080 hours.
- Therefore, eligible employees may obtain affordable and minimum health insurance coverage thanks to FTE calculations under the Affordable Care Act.
- A full-time equivalent (FTE) is a unit of measurement used to figure out the number of full-time hours worked by all employees in a business.
- The calculation is straightforward — enter the number of full-time employees together with the total number of hours worked by part-time employees per week.
- With Clockify, you can easily track your cost rates per employee and then compare and contrast them with employee billable hourly rates.
As evident, once you have the total number of hours per day, you’ll be able to pick whatever days/employees ratio you want to carry out the estimated workload. 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. These rates will depend on the PTO accrual rate policies of a company, organization, or institution.
What Is the Purpose of Calculating FTE?
To calculate FTEs and see if you qualify for tax credit, you can choose one of the said methods (we’ve provided calculators for each). If you, for instance, choose the first method, enter all the actual hours worked (including PTO) and divide that number with 2,080 to get the final FTE. To help you determine if you are eligible for a small-employer healthcare tax credit, you need to count the number of employees employed in your company throughout the year. The calculation is straightforward — enter the number of full-time employees together with the total number of hours worked by part-time employees per week. The calculator will tell how many full-time employees that represents and whether or not you are an Applicable Large Employer. The expected length of a full-time schedule has changed a lot throughout history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century.
The baseline in order to qualify as 1.0 unit of a full-time employee is set at 40 hours, so a part-time employee that worked 20 hours would be marked as a 0.5 FTE. If you want to save time, why not use our free full time equivalent calculator template for excel to easily work out your company’s FTE. Three full-time employees would have an FTE of 3.0 and the part-time FTE is 0.875.
The role of FTE in calculating eligibility for the Paycheck Protection Program (PPP)
Benefits like paid time off and maternity/paternity leave are all included within the number of hours worked, so don’t worry about accounting for these hours. Divide the total hours worked by all of your employees by the number of available full-time hours in a year (usually 2,080). This gives you the total number of hours worked by all of your employees. In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees.
- First, let’s look at what full-time equivalent or FTE actually means.
- 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.
- For example, if your entire staff works part-time, the FTE employee is a hypothetical full-time worker by which your part-time workers are measured.
- On the other hand, employee Janet works 1.25 times the amount of a full-time employee and may receive a higher salary than 1.0 employee.
- If an employee works 40 hours a week, they count as one full-time employee or 1.0 FTE.
Depending on how big a company is, the ERC is calculated differently. Companies with an average FTE below 100 receive tax relief based on all employee wages, while companies with an average FTE above 100 receive tax relief based on wages paid to employees who were not working. The Paycheck Protection Program (PPP) was launched by the US Small Business Administration (SBA) to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.
How FTEs Work
Her work has been published in Sitepoint, Fast Capital 360, Social Media Today, WPMayor among other publications. And lastly, “contracts” is the noun here and “full-time” needs to be hyphenated to modify it. Finally, there is no noun in the sentence meaning that “full-time” is not hyphenated. Here, we don’t need to hyphenate “full_time” because it isn’t modifying a noun. The last of the three styles is less common but can still work if you like the look of titles this way.
The ACA considers a full-time employee one who works at least 30 hours per week. This is where the concept of the full-time equivalent (FTE) employee comes in. This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on. It might sound cold, but it’s a vital metric when companies are applying for government loans, and when determining whether the company is large enough to have to follow certain laws. With this FTE Calculator, you can quickly calculate how many full-time equivalent employees are on your team. As it helps you work out how many manhours of work are being done, FTE calculation is an important part of business planning.
In this case, you would capitalize “full” but not “time” as they’re part of the same word. 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. The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision (ESRP) Estimator to help you determine FTEs and see if you qualify as an ALE. For example, 1.0 is typically the FTE representation of an individual’s full work/school day, while 0.5 would indicate half of the original figure, generally in reference to the workday.
Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year. To do this, multiply the number of weeks in a year with the number of hours for a full-time position. Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes. That said, full-time equivalent (FTE) is a metric used to determine the total number of full-time workers that you have in an entire organization. In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters.
It is crucial for each company to know their FTE to ensure they are complying with the law. Once a business knows the FTE of each employee, they can calculate their company’s FTE. So, 75 is the number of hours needed per day to finish the said 600-hour project. However, it will be up to you to decide how many people you’ll want to employ to carry this out and what type of employment you will offer them.
For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to. Conversely, consider a business that has two employees working 60 hours a week each. When the company calculates their FTE, they realize their two employees are the equivalent of three full-time workers.
Such calculations facilitate accounting processes such as estimating wages, payroll, costs, etc. Employees who have more than 50 full-time employees or FTE workers, known as applicable large employers (ALE), must be in compliance with rules laid out by the ACA. These regulations include shared responsibility provisions and tax reporting requirements like issuing Form 1095-C when necessary. An FTE or full-time equivalent calculation helps organizations better understand operational logistics as it relates to their employees and their employees’ contributions.
A full-time equivalent, sometimes abbreviated as FTE, is a unit to measure employed persons or students in a way that makes them comparable although they may work or study a different number of hours per week. To calculate an FTE salary, you must convert an employee salary into a full-time equivalent salary within a full year, regardless of whether the employee has a full-time or a part-time position. A full-time employee who works 40 hours per week is equal to one FTE, and a part-time employee working 20 hours per week is equal to 0.5 FTE. Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total.
In our example, the company gives all its workers the same four weeks off, but employees may have different benefits packages in some companies, which may change the FTE calculations. For instance, part-time employees may not receive as many days off as their full-time colleagues. In this example, your company has the equivalent of 5.24 full-time employees, or a 5.24 FTE.
A part-time worker who works half-time would be equivalent to 0.5 FTE. This is how a company, on average, calculates the average yearly number of hours that a full-time employee works. Essentially, the FTE is the number of determined full-time positions in an organisation. It is used to count employees depending on their degree of employment. Different locations have different laws regarding employer mandates to their employees.