Full-Time Equivalent FTE Definition and FAQs BerniePortal

Each employee who worked 40 or more hours per week on average, during a specific calculation period counts as 1.0 FTE. No employee can be greater than 1.0 FTE, as overtime is not counted for this calculation. Full-time equivalent is a unit of measurement that calculates the number of full-time and part-time employees there are in an organization and is an important metric that can help businesses manage projects and schedule tasks more efficiently. FTEs are most commonly used in human resources and accounting to determine the equivalent number of full-time employees in a company, comprised of the work hours of both part- and full-time employees. On the other hand, a full-time equivalent is one or more employees whose work hours combine together to total at least 30 hours per week or 130 hours per month.

Full-time equivalent refers to a unit which indicates the workload of an employed person in a way that makes workloads comparable across various contexts. It allows companies to standardize salaries by finding an equivalent salary between the part-time and those working full-time. Let’s say you have an upcoming project and you need to determine all your costs.

What is a typical official full-time schedule?

Full-time equivalent is calculated by dividing an employee’s scheduled hours by the company’s work scheduled hours on a weekly full-time basis. The FTE is calculated by taking into account the number of hours worked in a full-time weekly https://www.bookstime.com/ schedule and the actual number of hours employees work. The U.S. Office of Management and Budget, or OMB, the President’s budget office, will often place upper limits on the total number of FTE that a given agency may utilize each year.

Being a basic criterion in staff controlling, it is one of the most important staff indicators for companies. Particularly due to the development in the part-time sector, your fte meaning staff planning will be more comprehensible and controllable with this ratio. In short, it is a crucial term that is important for HR specialists and accountants alike.

How to Calculate Full-Time Equivalent

It’s an important element to accounting to determine employee wages, hours of service, and your company’s expenses. These numbers, once calculated, are used to determine the company’s expenses and available wages to be paid to workers. When employees work less than the standard 40-hour workweek, it is usually company policy that the part-time personnel will not receive group health insurance or the same kind of coverage as a full time employee. Therefore, a business will use FTE to calculate whether their wages are better spent on an equivalent salary for more part-timers or fewer full-time employees plus benefits.