HR departments often use FTE salaries to determine their part-time workers’ compensation. A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee. For instance, let’s say a full-time graphic designer working 40 hours per week makes $48,000 per year. A part-time graphic fte meaning designer working 30 hours per week at that same company would have an FTE of 0.75 since they work 75% of that 40 hours. According to the Affordable Care Act (ACA), employers with 50 or more FTEs are required to offer ACA-compliant benefits. The ACA defines a full-time employee as someone who works 30 hours per week or 130 hours per month.
Gives insight into organizational costs
- For example, if you have part-time employees working various hours, sum all their hours to find the total part-time hours before dividing by the standard full-time hours.
- 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.
- If you’re not sure where to start to track FTE, consider using QuickBooks Time , which helps organize employee hours and delivers helpful insights into your FTE calculation.
- First and foremost, make a list of all your employees within an organization.
For the SBA calculation method #1, to get the FTE, enter the number of full-time employees and the total sum of work hours by part-time employees. A typical or full-time work week usually consists of 40 working hours without paid or sick leave. So, if your standard work week consists of 40 work hours, your employees probably work 8 hours per day. Still, this doesn’t have to be the case in all organizations as certain employees may work 7 hours one day and 9 hours the next day. In general terms, full-time equivalent (or FTE) is a unit of measure that plays an important role in calculations used in businesses, project management, or federal programs for eligibility purposes. This includes three full-time employees that work 40 hours per week.
Add annual hours worked for full-time employees and part-time employees
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- This enables HR to categorize employees, analyze, gain valuable insight for business planning and projection, and boost the organization’s efficiency.
- This helps you compare and analyse the amount of work being done, even if your employees work odd hours.
- With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.
- This includes three full-time employees that work 40 hours per week.
HR can analyze FTE ratios to ensure the workforce alignment supports desired cultural goals. FTEs can be compared to revenue output and other productivity metrics to assess workload balance across the organization. It applies the following procedure, which we explain through an example for a hypothetical company.
The importance of FTE in workforce planning
- The annual hours for your full-time employees (A and B) add up to 4,160 (2,080 x 2).
- Let’s dive into the main benefits of using an FTE calculation below.
- This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff.
- Personio offers a host of valuable reporting and analytics features, so that you can have access to critical HR KPIs at your fingertips.
- Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees.
- Fast and reliable planning, because every second counts on the road.
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- In other words, do you know what the full time equivalent is and how it can help you better understand the needs of your organization?
- You may need to combine multiple systems to track more complicated metrics.
- For example, let’s say a company considers 40 hours per week as full-time employment.
- It applies the following procedure, which we explain through an example for a hypothetical company.
- In this step, you have to add the total work hours worked by each full-time employee and total working hours worked by each part-time employee.
From there, if your full-time hours are 40 per week, divide the number by 2,080. If your total full-time hours are 30 per week, divide the number by 1,560. This will give you your total FTE for all full- and part-time employees for the year. You can use the FTE total each week, month, or year to determine company growth. You can also use the FTE total to remain compliant with federal, state, and local labor laws that may be based on employer size such as mandatory sick time laws. Full-time equivalent (FTE) is a measurement employers use to standardize their headcount.
