How to Calculate the Full Time Equivalent FTE in 4 Steps

These rates will depend on the PTO accrual rate policies of a company, organization, or institution. Considering that the FTE unit of measure is based on the total number of hours worked — it may not indicate the actual number of people working in a company. Whereas, employees that works 20 hours per week are considered 0.5 FTEs. Hopefully, this article has helped you understand FTE meaning in business, how to calculate it, and why it’s an important metric.

The full-time equivalent is an indicator that answers many of the questions Human Resources departments need answers to. This, therefore allows them to make better decisions regarding personnel management. For all intents and purposes, your business requires 4.25 employees to function. If you’re looking for a way to evaluate your organization’s ability to handle upcoming projects, a resource gap analysis is a great way to do it.

B. Downsides of calculating hours

In reference to an individual, 0.5 usually refers to the fact that the worker renders less than a full day of work or the student attends less than a full day of classes. The underlying https://www.bookstime.com/articles/full-time-equivalent period can be, for example, a day, a month or even a year. Being a basic criterion in staff controlling, it is one of the most important staff indicators for companies.

An FTE 100% is a full-time employee, the one working 40-hour workweeks (also known as an FTE 1.0). That means that you have seven employees, totaling 170 hours per week. Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle while federal programs use different FTE calculation methods. However, if your company employs part-time employees as well, several of them together may equal 1.0 FTE. The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an employee’s hourly PTO accrual rate.

Calculating rates of your employees with Clockify

Essentially, the FTE is the number of determined full-time positions in an organisation. It is used to count employees https://www.bookstime.com/ depending on their degree of employment. A part-time worker who works half-time would be equivalent to 0.5 FTE.