Full-time Equivalent (FTE) is a unit equivalent to the workload of full-time employees. FTE is a comparison between the total number of paid working hours with the number of hours worked in a period. This unit is used to assess employees regardless of the difference in total hours worked. Currently, seasonal and temporary employees are not included in the calculation of the total FTE.
Step
Method 1 of 2: Calculating FTE Manually
Step 1. Calculate the number of hours your full-time employee worked per period
A full-time employee is someone who works a maximum of 40 hours (minimum 30 hours) per week for more than 120 days each year.
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Multiply the number of employees by 40 (8 hours a day x 5 days a week).
Example: 6 full-time employees: 6 x 40 = 240 hours
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Multiply the result by 52 (number of weeks in a year).
Example: 240 x 52 = 12,480 full-time hours
Step 2. Find the number of hours your part-time employee worked
This calculation can be applied to companies that have full-time and part-time employees.
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Multiply the total weekly hours worked by the number of weeks worked for part-time employees. Example:
- One part-time employee works 15 hours per week for 30 weeks: 1 x 15 x 30 = 450 hours
- Two part-time employees work 20 hours per week for 40 weeks: 2 x 20 x 40 = 1,600 hours
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Add up the results to get the total hours worked.
Example: 450 + 1,600 = 2,050 hours of part-time work
Step 3. Combine the working hours of full-time and part-time employees
This is the total number of hours worked by all employees.
Example: 12,480 (full time) + 2,050 (part time) = 14,530 total hours worked
Step 4. Divide the total hours worked by the hours worked full time
This will determine the FTE of a company for a certain period.
- Time off and other paid leave (sick leave, maternity leave, etc.) are counted as part of working hours. So you don't need to do any special calculations for these hours.
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Divide the total hours worked by 2,080. This number is a fixed number obtained by calculating the following equation: 8 hours a day x 5 days a week x 52 weeks a year. This last step will help you calculate your annual FTE.
Example: 14,530 total hours worked 2,080 = 6,986 FTE
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Divide the total hours worked by 173.33 to find FTE per month.
Example: 4,000 working hours for February 173, 33 = 23.07 FTE
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Divide the total working hours by 8 to get FTE per day.
Example: 80 working hours daily 8 = 10 FTE
Method 2 of 2: Calculating FTE Using Other Methods
Step 1. Use an online FTE calculator
These online tools allow you to enter the number of full-time employees you have and the hours part-time employees work each week. Then, this online tool will calculate it and give you an estimate of the FTE value.
However, keep in mind that the calculations you get from the FTE calculator tool are only estimates. You can use this number to estimate FTE scores for yourself, as a guide, or for teaching purposes. However, these calculations should not be used as a substitute for legal or tax advice from an expert in the field. When you need a 100% accurate calculation for business reasons, you should use another method
Step 2. Pay an expert to calculate your company's FTE
Calculating FTE is an important thing to do right. If you make a miscalculation, it will negatively affect many aspects of your business, including profits, taxes, and other issues. So, if you're not confident in your ability to perfectly calculate a business FTE, hire an accountant with experience in this area to calculate it.
- You should provide this person with important information about your business so they can gather all the information needed to calculate your FTE.
- They will need access to employee files, past tax documents, and similar documents.
Step 3. Ask a lawyer for help
Certain types of attorneys have experience in this area and can help you ensure that these calculations are done correctly. Seek advice from a corporate or tax attorney to help calculate your FTE.
