So, with all the previous steps in mind, let’s calculate the actual FTE based on the specific numbers we’ve used. The first step to calculating the FTE of your company is to make a list of all of your employees. FTE or full-time equivalent is a tool to help you gauge the potential productivity of your business or company. Regardless of the type of business you’re in, it’s important to keep an updated number of your employees and the hours they dedicate to their work duties. 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. The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision (ESRP) Estimator to help you determine FTEs and see if you qualify as an ALE.

FTEs are calculated in different ways for different accounting uses or for calculating eligibility for different federal programs. Using a Kiosk — for more advanced time management, choose the time clock Kiosk in Clockify where employees can clock in with their PIN code (just make sure you enable it in the Settings section). Bear in mind that in some cases, a year can have 53 weeks so the number of hours may be slightly different. Join BambooHR and League to explore how to go beyond wellness resolutions so your organization can reap all the benefits of a healthy workforce. Knowing your FTE number is also helpful for determining if your organization is eligible for certain benefits programs, such as the Small Business Health Options Program (SHOP). Declining FTE percentages may indicate problems retaining full-time staff.

How to Calculate the Full Time Equivalent

The next step in the calculation is to determine how many work hours both full and part-time employees work. It represents a single full-time employee or multiple part-time employees whose hours add up to one full-time employee’s hours. Now add the total number of hours worked by full-time employees to that of part-time employees to get the total number of hours for all employees. Five of them work full-time (40 hours per week), three occupy a part-time position each working 20 hours a week, and the other two each work 10 hours per week. The list should include the employee’s name and the number of hours they work per week.

In the construction industry, you’ll need a larger headcount when a bigger project comes along. It’s easier to plan for this when you can visualize your project needs and team capacity. Next, you must determine whether you need more resources now or in the future.

FTE vs. Headcount: The Key Differences HR Should Know

For example, 1.0 is typically the FTE representation of an individual’s full work/school day, while 0.5 would indicate half of the original figure, generally in reference to the workday. 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. See how Factorial powers productivity, engagement, and employee retention.

This will depend on your industry and the type of projects you embark on. Use your FTE calculation to find out whether your company qualifies. If so, confirm you’re offering the right level of health insurance to your team to prevent a tax penalty.

How to calculate FTEs for your company? (+ examples)

It’s up to HR to determine which metrics will most help to leverage the headcount metric. Too often, HR will look at headcount metrics or other metrics in isolation rather than determining what these metrics mean from a business perspective. Linking performance with business outcomes in headcount reports will provide real value to business leaders and help you meet organizational goals. FTE (full-time equivalent) and headcount are both methods used to count members within an organization. The key difference is that FTE refers to the number of full-time hours being worked, while headcount is the number of employees in an organization. But if you pay monthly or semimonthly, you may have to divide the number of available work hours in the month by the number of hours the employee worked, on average, to calculate your actual FTE.

You can also use an FTE calculation to determine the appropriate pay for part-time workers. To identify the FTE for a specific part-time position, just divide the number of hours worked by the employee by the number of hours considered for a full-time worker. A full-time position would equate to around 30 to 40 hours fte meaning per week for most employers. If a company considers 40 hours per week as the basis for a full-time position, then anyone working an amount of hours below this range is considered a part-time employee. The same logic is applied if a company considers 30 hours per week as the standard for a full-time position.

Under ACA, any employee that works at least 30 hours per week, or 130 on a monthly basis, is entitled to some form of healthcare. It is sometimes useful to know how the total number of full-time and part-time employees are working in a business. But, in many situations, a business needs to view or report its staffing level in terms of full-time work. In practice, these numbers fall somewhere between 30 and 40 hours per week, with 40 hours per week (8 hours per day, 5 days per week) being the most common norm for a full-time schedule.

• This includes three full-time employees that work 40 hours per week.
• Imagine that, with the same FTE, an employee can deliver 100 units, while another only delivers 30.
• To calculate your yearly FTE, you should calculate the work hours of all of your employees for that one year and divide that number by the ideal number of work hours per year for one full-time employee.
• 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.
• Converting hours worked by part-time employees into full-time equivalents can be helpful when calculating these metrics.
• While headcount planning can help HR work with managers and business leaders to build and scale the organization’s workforce, it does have some limitations.
• As you can see, the part-time employees are converted into the performance of a full-time employee.