Make it easier for production and supply staff to communicate their availability and time off with our software. Make sure that your staff are in the right place at the right time, for optimal customer satisfaction. Fast and reliable planning, because https://www.bookstime.com/ every second counts on the road. Plan the right people at the right times and save valuable time and money in your store. Below is a step-by-step guide to two common FTE calculation methods, along with an example calculation to illustrate the process.
Why do employers use FTE?
Employers can also monitor workloads for future budgeting and staffing with FTE. To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40. For example, if an employee has an FTE of 0.80, multiplying that number by 40 means that an employee works 32 hours a week. 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). With FTE, you can figure out when to hire and whether a full time employee or a part time employee is required.
- It’s not just about numbers; it’s about leveraging FTE data to craft strategic masterstrokes in workforce planning, budgeting, and talent management.
- A full-time equivalent employee refers to a combination of part-time employees that add up to one or more full-time employees.
- Like we mentioned above, employers use FTE calculations for a number of different reasons to better understand the employment needs and labor output of their organization.
- The calculation of full-time equivalent (FTE) is an employee’s scheduled hours divided by the employer’s hours for a full-time workweek.
- To calculate headcount, all you have to do is add up all your employees.
How do you calculate FTE for employees?
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. If you have a mix of full-time and part-time employees, the full-time equivalent (FTE) lets you represents the full-time hours that all of the employees in your business work. FTEs are important for checking HR metrics and determining tax statuses for your business, but luckily they’re pretty easy to calculate on your own.
Determine Which Employees Are Full Time vs Part Time
If you’re calculating FTE for a different purpose and consider 40 hours to be full time in your organization, you can use that as your criteria. For the purposes of calculating FTE, most employers consider a full-time employee one who works between hours a week. Let’s say you have 100 fte meaning employees, but 18 of those employees are part-time and only work 10 hours a week. Altogether, those 18 employees only account for the hours of 4.5 full-time employees. The Fair Labor Standards Act (FLSA) doesn’t define what full-time or part-time employment is for any employer.
- For instance, let’s say a full-time graphic designer working 40 hours per week makes $48,000 per year.
- While headcount planning can help HR work with managers and business leaders to build and scale the organization’s workforce, it does have some limitations.
- The same logic is applied if a company considers 30 hours per week as the standard for a full-time position.
- Generally, if you pay the employee a salary less than the minimum, the employee must be classified as non-exempt.
- An explanation of how FTE is calculated and the various ways in which a business can use this metric when forecasting and budgeting.
- In education, FTE calculations may consider instructional hours, student-teacher ratios, and classroom capacity.
Factors such as regular hours worked, overtime hours, paid time off, and employee classifications (full-time, part-time) should be considered in FTE calculations. Understanding FTE is like having a magic wand for managing your workforce in business and HR. Instead of just counting heads, FTE lets you see the real impact of your team’s hours which can be easily calculated and tracked automatically by a time tracking software. 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. In practice, these numbers fall somewhere between 30 and 40 hours per week, with 40 hours per week (8 hours per day, 5 days per week) being the most common norm for a full-time schedule. To calculate FTEs and see if you qualify for tax credit, you can choose one of the said methods — either The actual hours worked or Days-worked equivalency methods (we’ve provided calculators for each).
As you can see, the part-time employees are converted into the performance of a full-time employee. So the FTE is not the number of employees in a company, but the equivalent of a full-time employee. Because the number of employees says nothing about a company’s actual work performance. The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees. Your FTE calculations must be accurate for IRS and Department of Labor (DOL) reporting.
Monthly FTE is total hours divided by standard monthly hours (e.g., 160 hours). Yearly FTE divides total hours by standard yearly hours (e.g., 2,080 hours). Part-time and seasonal workers contribute to FTE by calculating their hours worked as a proportion of full-time hours. For example, if a part-time employee works 20 hours per week and standard full-time hours are 40, their FTE would be 0.5. Similarly, seasonal workers’ hours are prorated based on their duration of employment. To be able to calculate the total FTE in your company, you need to determine the FTE of your part-time workers first.
How to work out FTE for your company
While we strive to provide up-to-date and accurate information, we do not guarantee the accuracy, completeness and timeliness of the information on our website for any purpose. We are not liable for any damage or loss arising from the use of the information on our website. FTE metrics serve as a cornerstone not only in workforce planning and financial forecasting but also play a pivotal role intalent management and development.
- You can also use an FTE calculation to determine the appropriate pay for part-time workers.
- FTE is equally important because it helps HR standardize their headcount, simplify their payroll, and accurately forecast budgets.
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- For instance, in terms of business, calculating FTEs can be useful in determining how many hours part-time employees should work to equal the number of hours full-time employees work.
- Since both are considered to be full-time schedules in their respective companies, both count as 100% or 1.0 FTE.
- Our model will then instantly calculate the Full Time Equivalent for you.
