This can be done manually or by using the payroll reports available from your payroll service provider. So it makes sense to set the baseline as 7 hours to get 1 FTE per man-day and settle correctly. Because when planning a 100% utilization of an employee, you’ll get a different result depending on where this employee is located. Your bench time will increase and project https://www.bookstime.com/tax-rates/oregon profitability will drop. If you see that you have 5000 hours of frontend development available in the next three months, it sounds great, but you also have no idea what it means. During a resource planning session, you might want to know how many FTEs you have per specific technology or team (backend/frontend) to know where to focus in sales or recruitment.
How to Calculate a Full-Time Equivalent for an Employee (FTE)
First, let’s look at what full-time equivalent or FTE actually means. The full time equivalent, often abbreviated as FTE is an indicator that reflects an employee’s productive capacity. An FTE of 1.0, for example, corresponds to the hours worked in a day for a full-time employee. Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5.
How to craft a perfect employee attendance policy
Therefore, an FTE for a standard full-time worker working 40 hours per week is 1.0 FTE. An FTE calculation is a method for measuring how many full-time employees are present at a company, alongside the number of part-time employees that in aggregate can be translated into full-time terms. With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.
- After all, this is how much your full-time employees spend working for you.
- Proportional FTE calculation is used when employees work part-time or have variable work hours.
- Prior to that, Arkadiusz was at the helm of his own software development company where he oversaw operations.
- There are tools that can do this for you automatically, but it’s helpful to know the steps that go into calculating your FTE.
- Yearly, a company generally considers an FTE to be valued at 2,080 hours.
Project Accounting
Proof of FTE is evidence required for Paycheck Provider Program (PPP) Loan Forgiveness. The PPP is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under the PPP program, businesses can apply for funding to keep employees on payroll and cover certain operational costs.
Create a free account to unlock this Template
One part-time employee who works ten hours per week and one part-time employee who works 25 hours per week. But to calculate FTE, you need to know the working hours and this can be easily tracked by a time tracking software which tracks offline time and idle time. Additionally, there are a lot of benefits of using time tracking software like project time tracking. You can also track project profit and loss which is very essential for the stability of an organization.
Planning resources for greater utilization
FTE calculations help businesses allocate resources efficiently by determining the optimal number of employees required to meet operational demands. It also aids in budgeting by providing insights into labor costs and identifying opportunities for cost-saving measures. An employee who works less than the standard hours (in your case 40 hours) is a part-time employee. The part-time employees, on the other hand, work 20 hours per week and 25 weeks out of the year. If you fall under the criteria for an applicable large employer, you’re required to offer health insurance to your employees. Plus, knowing your company’s FTE count will help reduce overall costs by forecasting employee hours and salaries.
In the case of a 40-hour workweek, an employee scheduled to work 20 hours a week would be considered 0.5 FTEs (20 hours divided by 40 hours). Using this calculation, two part-time employees who work 20 hours per week equates to 1.0 FTE. According to the Affordable Care Act (ACA), employers with 50 or more FTEs are required to offer ACA-compliant benefits. The ACA defines a full-time fte meaning employee as someone who works 30 hours per week or 130 hours per month. 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. Legal rules are important when calculating Full-Time Equivalent (FTE), making sure companies follow labor laws and industry standards.
FTE Calculation Example
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. Now add the total number of hours worked by full-time employees to that of part-time employees to get the total number of hours for all employees.