Summary. Full-time equivalent is a way to keep track of your staff and workload. It’s primarily used to compare part-time hours to full-time hours to see how many “full time” employees you end up with. It can also be used to determine workload and how much staff you have, as you can include full-time employees in your FTE calculations.
Calculating FTE is most useful to businesses that employ a lot of part-time employees. It makes it easier to determine coverage and project planning. It can also be used in businesses with primarily full-time employees as a way to track projects and determine workload.
Key Takeaways:
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FTE is a way to measure how many “full-time” employees you have in terms of hours worked. It allows you to see how many full-time employees your part-time employees’ hours are equivalent to.
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40 hours is typically considered the standard for full-time work, though the ACA mandates that 30 hours should be considered full-time. That means that’s the metric that should be used to make sure that your organization is ACA-compliant.
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FTE is usually calculated as a decimal, though it can also be shown as a percentage.
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Calculating FTE is relatively simple. It requires dividing the number of hours you want to know the FTE value by the number of full-time hours. This can be done either weekly, let’s say, 30 hours as full-time, or annually, 1,560 hours full-time.
What Is Full-Time Equivalent?
Full-time equivalent (FTE), sometimes called work time equivalent (WTE) or work year equivalent (WYE), is a way to tabulate employees’ hours as compared to full-time employment. This is most often used with businesses that have several part-time workers and want to determine employee needs in terms of workload and coverage.
The majority of businesses will consider full-time to be 40 hours per week, but it isn’t a set number. Organizations can determine full-time to be a certain number of hours – such as 40, or a certain number of days per week, such as five.
The Affordable Care Act (ACA) considered employees that work more than 30 hours per week as full-time, at least in terms of health care coverage. That is another factor that will need to be considered when determining what counts as full-time.
Calculating FTEs
FTE is usually calculated as a decimal. It’s a representation of the percentage of the full-time period that an employee works. It can be used as a way to determine how many “full-time” workers you have, despite the fact that they work part-time.
When calculating FTE, make sure to:
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Set a number of hours for a full-time position. In order to determine what counts as FTE, you need to know what full-time is. Many businesses use 40 hours per week, but 30 is becoming more common due to the ACA regulations.
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Include all of your employees and the hours they work. Unless you just want the FTE for one employee (which has limited uses), you’ll need to gather the information for all of your workers – part-time in particular. That will allow you to determine how many full-time positions your part-time workers fill.
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Calculate the number of hours your employees work per year. While this is more commonly done in a WYE calculation, it’s more precise to do it per year. It’s certainly possible to calculate with just weekly hours, and there will be examples of both types of calculations below.
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Separate your full-time and part-time employee hours. If you’re adding up everyone’s hours, you’re going to need to separate the hours from your full-time and part-time employees. That will allow you to determine how many hours your part-time employees worked.
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Compare part-time work to full-time work. The last step is to make a comparison. Know how many hours your full-time workers put in per year. Once you’ve done that, you’ll need to divide how many hours your part-time employees work by that number, giving you a decimal that shows the percentage.
Example FTE Calculation
To make the process clearer, here are some examples of FTE calculations. Both will set 40 hours as a full-time position, or rather, as 1.0 FTE.
Let’s start by using weekly hours in order to get a feel for how FTE calculations work.
What you’re determining is how many full-time workers a part-time worker is equivalent to. That means that if you’re looking for one worker, you will get a number less than one for sure.
Say you have a part-time worker that works 20 hours per week. In order to calculate this person’s FTE, you’d divide that by a full-time workweek, which would be 40 hours. So:
20 / 40 = 0.5
Therefore, this worker’s FTE would be 0.5, making them equivalent to half a full-time worker.
Now, most FTE calculations are going to be made with more than one worker. The best way to do that would be to use annual hours. So here’s another example.
Calculating it using annual hours:
Start by listing your employees. If you have three part-time employees and two full-time employees, then it may look like this:
| Employee | Total hours worked per week | Classification |
|---|---|---|
| Sally Hernandez | 40 | Full time |
| Benjamin Smith | 40 | Full time |
| Carlos Chen | 30 | Part time |
| Diamond Brown | 25 | Part time |
| Alice Jones | 10 | Part Time |
As there are 52 weeks in a year, you’d multiply 40 X 52 to get 2,080 as your FTE. So now your table would look like this:
| Employee | Total hours worked per week | Classification | Annual Work Hours |
|---|---|---|---|
| Sally Hernandez | 40 | Full time | 2,080 |
| Benjamin Smith | 40 | Full time | 2,080 |
| Carlos Chen | 30 | Part time | 1,560 |
| Diamond Brown | 25 | Part time | 1,300 |
| Alice Jones | 10 | Part time | 520 |
As three of your employees, Carlos, Diamond, and Alice are part-time, they’d be the numbers you’d focus on. In order to get their FTE, you’d add up the total number of hours they worked that year:
1,560 + 1,300 + 520 = 3,380
In order to determine their FTE, you’d divide that number by one full-time rate. You’re looking to see how many full-time employees they’re equivalent to, so you’ll likely get a number greater than one.
3,380 / 2,080 = 1.625
That means that your three part-time workers are equivalent to a little more than one and a half full-time workers.
Note that you can get the same result by doing this with weekly hours. For example:
30 + 25 + 10 = 65
65 / 40 = 1.625
That being said, part-time workers often don’t work a set number of hours per week (though there are exceptions). Using the annual number of hours that they worked is going to net you a much more accurate result. Ideally, you should use the actual annual hours they worked rather than multiplying by 52 if accuracy is your goal.
Calculating FTE for All Employees
If you wish to calculate the FTE of all of your employees, not just your part-time ones, you can add the FTE of your full-time employees to your part-time ones.
From the example above, then, you’d have your three part-time employees with an FTE of 1.625. Your two full-time employees each have an FTE of 1, as 2,080 / 2,080 = 1. Therefore:
1.625 + 1 + 1 = 3.625
All of your employees’ FTE is equivalent to 3.625 employees. So you have the equivalent of a bit more than three and a half full-time workers.
It should be noted if you’re using this for project planning, you’ll also have to take into account vacation days and paid holidays. Full-time employees, and many part-time employees, don’t actually work 52 weeks per year. They are, however, paid for that amount of time, which makes 52 important for salary calculations.
Being ACA Compliant Using FTE
The ACA requires that every employer that has an FTE of 50 or higher must provide health benefits compliant with the regulation. The ACA considers 30 hours per week to be full-time, which means that that is the baseline you have to use to find out if your business applies.
What Is Full-Time Equivalent? FAQ
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What does FTE 100% mean?
FTE 100% means that the position is equal to a full-time position. As FTE answers are usually left in decimal form, it can take a moment to make the mental calculation.
For example, if your employee works 30 hours per week and you’re following the ACA guidelines of that being full-time, then you have:
30 / 30 = 1
In order to turn that into a percentage, you’d multiply it by 100. That would get your FTE 100%.
While doing it with one may feel silly, it’s the same principle with all other calculations. An FTE of 0.9 means that the employee works 90% of full-time hours, 0.625 means that the employee works 63% full-time, and so on.
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How does the U.S. Small Business Administration (SBA) define FTE employees?
The SBA uses the ACA’s guidelines and sets FTE at 30 hours. That means that annual full-time hours would be 1,560 hours.
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Does FTE relate to salary?
Being part-time or full-time doesn’t necessarily mean that you’ll get a lower hourly wage, meaning that there are ways to use FTE to calculate a salary for a part-time worker. If, for instance, a full-time position would pay $60,000, then someone working less than full-time would make a percentage of that salary.
If your FTE is set at 40, and your part-time worker works 20 hours per week, then they’d have an FTE of 0.5 and earn $30,000 annually. However, if your FTE is 30 hours, then their FTE would be 0.67, and they’d earn $40,000.
References
Author
Di Doherty
Di has been a writer for more than half her life. Most of her writing so far has been fiction, and she’s gotten short stories published in online magazines Kzine and Silver Blade, as well as a flash fiction piece in the Bookends review. Di graduated from Mary Baldwin College (now University) with a degree in Psychology and Sociology.
