How to Calculate the Full Time Equivalent FTE in 4 Steps

A company may have 50 employees, but if some of them work part-time and the total FTE hours of the employees are under 50, then the business does not need to offer insurance. The number of full-time employees a company employs may impact taxes to the IRS. They may be eligible for tax breaks or may be subject to different regulations. This means that to the IRS, an employee working 30 hours a week is 100% FTE. To calculate FTEs, add together the number of hours worked by all part-time employees and divide that total by the number of hours worked by full-time employees. In the light of the current socio-economical situation, this scheme was established with the aim to support businesses to retain employees on the payroll.

Is FTE the same as full-time?

FTE 100% refers to a full-time employee or the equivalent of a full-time employee. In most companies, this means the employee works 40 hours, but some companies use other time amounts to describe full-time status. This can also be described as a 1.0 FTE value.

For the year 2021, the maximum benefit full time equivalents $28,000 for the entire year. 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. A full-time equivalent is also useful when evaluating whether it’s more cost-effective to hire a part-time worker versus a full-time employee. Organizations can also calculate the pro-rata salary for part-time employees based on the FTE.

Why is FTE important for your company?

Let’s say you have four full-time employees, three part-time employees working 20 hours a week for 30 weeks per year, and one part-time employee working 15 hours a week for 52 weeks per year. Get this by multiplying the number of full-time employees by the number of hours in a working week . Since each full-time employee counts as 1 FTE, they should each get a similar amount of work done during the day. If there are full-time employees getting less work done than others, then they aren’t working as effectively and can use improvement.

  • If you are such an employer, then you are eligible to apply for a tax credit in the amount of 50% of employer-paid health care premiums.
  • Outside of the business environment, FTE is also used to measure a student’s class load or involvement in a school project… It seems like we never leave school behind.
  • Some health insurance policies through the Affordable Care Act are only available to businesses that have certain FTEs.
  • Meanwhile, a part-time or contract graphic designer at the same company works 22 hours per week.
  • With two 10-hour digits, this results in an FTE value of 0.5.
  • We follow ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources.

Since both are considered to be full-time schedules in their respective companies, both count as a 100% or 1.0 FTE. However, the IRS mandates only 30 hours per week or 130 hours per month for an employee in the US to be considered full-time in terms of the type of employment. Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.

What does FTE mean in salary?

These values are combined with simple addition, so that three part-time employees working half as many hours as a full-time employee would have a total FTE of 1.5. If you have an estimate for how long a work project will take, divide the estimated hours by the hours in a workweek. The result is the number of full-time equivalent employees you’ll need to complete the project.

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In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees. 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. Just indicate how many employees work at your company, how many hours they work a week, and for how many weeks. Our model will then instantly calculate the Full Time Equivalent for you.

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