What is Full-Time Equivalent? With Calculations

Full time equivalent

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.

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.

What Does FTE Mean in Regard to Salary?

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 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.

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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 FTEs in determining whether an employee qualifies as an ALE

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.

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.

Credits & Deductions

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 Full time equivalent 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.

  • Those five workers are in fact equivalent to 3.37 full-time workers.
  • However, if your company employs part-time employees as well, several of them together may equal 1.0 FTE.
  • The AP Style full time hyphen rule suggests that “full-time” should be hyphenated more often than it’s not.
  • Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year.

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.

What is Full Time Equivalent (FTE)?

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.

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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.

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.

Full time equivalent

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.

Calculating FTE for ACA

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.

Full time equivalent

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.

Full time equivalent

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.

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