3 Ways to Calculate Full Time Equivalent (FTE)

2024 Author: Samantha Chapman | [email protected]. Last modified: 2024-01-15 13:47

Full-Time Equivalent (FTE) is a unit of measure corresponding to the workload of a full-time employee. It represents a value equal to the number of full-time workers in a company and is calculated by adding all the working hours provided by the staff in a year, part-time and full-time, and then dividing the result obtained by the number of hours of job of a full-time employee. In this way it is possible to determine the effort required to carry out a project expressed in FTE, regardless of the real number of employees and the variations in working hours in a given period. This is a calculation used in many government and institutional situations. Currently, seasonal and temporary workers are excluded from the calculation of the FTE.

Steps

Method 1 of 3: Calculate the FTEs

Step 1. Calculate the hours worked by part-time employees

Use accounting records to find hours worked by all part-time staff. This step can be done by companies that have full-time and part-time employees among their employees.

• Multiply the total hours per week by the number of weeks worked by each part-time employee. Example:

  • 1 part-time employee worked 15 hours a week for 30 weeks: 1 x 15 x 30 = 450 hours.
  • 2 part-time employees served 20 hours per week for 40 weeks each: 2 x 20 x 40 = 1600 hours.

• Add the results together to get the total hours provided.

  Example: 450 + 1600 = 2050 part-time hours.

  

  Step 2. Find the number of hours worked by full-time employees in a given period

  A full-time worker provides a maximum of 40 hours per week or in any case an amount that coincides with that established by the national collective agreement relating to the category of workers considered.

  • Multiply the number of full-time employees by 40 (8 hours a day, 5 days a week).

    Example: 6 full-time employees provide 6 x 40 = 240 hours per week.

  • Multiply the result by 52 weeks per year.

    Example: 240 x 52 = 12480 full-time hours.

    

    Step 3. Add up the hours provided by part-time and full-time staff

    This way you find the total number of hours worked by all employees.

    Example: 12480 (full-time) + 1600 (part-time) = 14080 total hours.

    

    Step 4. Divide the amount obtained by the number of hours worked by the "typical employee" full time

    This calculation determines a company's FTE for a given year.

    • Holidays and other paid absences (sickness, maternity leave, leave and so on) are already counted as part of the hours worked; therefore you do not have to make special calculations for these situations.

    • Divide the total sum of hours by 2080. This is a constant value derived from the following expression: 8 hours of work per day x 5 days per week x 52 weeks per year. This is the final step in calculating the full-time equivalent.

      Example: 14080 total hours ÷ 2080 = 6, 769 FTE.

    • Divide the total hours by 173, 33 and find the monthly FTE.

      Example: 4000 hours for the month of February ÷ 173.33 = 23.07 FTE.

    • Divide the total number of hours by 8 and get the daily FTE.

      Example: 80 hours per day ÷ 8 = 10 FTE.

      Method 2 of 3: Using FTE's Online Calculators

      

      Step 1. Find an online calculator

      This tool allows you to simply enter the number of full-time workers and the hours per week provided by part-time employees. Next, the calculator does the math for you and provides an estimated FTE value. You can search online or use the calculators found at https://www.healthcare.gov/shop-calculators-fte/ and https://www.healthlawguideforbusiness.org/fte-calculator; they are in English, but easy to understand.

      

      Step 2. Find the worker data

      You need both the total number of full-time workers and the working hours of part-time employees. You should find this information in the attendance book or in the company's accounting records. Remember that full-time employees are all people who work for the number of hours per week established by the national contract for that particular category.

      

      Step 3. Enter the data

      Enter the staff values in the appropriate fields of the calculator. Check if the hours to be entered should be weekly, monthly or yearly and change the values accordingly. Check the information once more before clicking on the "calculate" button, in this way you are sure to get a correct result.

      

      Step 4. Use this FTE value only as an estimate

      Remember that all data obtained through an online calculator are approximate only and should be used solely as a guideline or for educational purposes. You should never use them as a substitute for a professional's opinion on legal or tax matters. Also, when you need 100% accurate information for your business, you should rely on other calculation methods.

      Method 3 of 3: Obtain and Use a Professional FTE Calculation

      

      Step 1. Pay an accountant to calculate your company's FTE

      This is an important process and you need to be sure that the obtained values are correct. If you make a mistake, you can negatively interfere with many areas of the business, including anticipated profits, taxes, and other important issues. Therefore, if you are unsure of your FTE calculation skills, hire an accountant experienced in this field to do it for you.

      • You will need to provide him with some important information about the company so that he can correctly calculate the FTE.
      • The accountant must have access to personnel files, previous tax documents and other similar files.

      

      Step 2. Get legal help

      Some lawyers are experts in this area and are able to calculate the FTE correctly. Seek the support of a lawyer who specializes in corporate law and tax matters.

      

      Step 3. Use the FTE to calculate business indicators

      The full-time equivalent analysis is a useful tool for assessing the effort required to manage part or all of the business. Business executives can also clearly monitor how staff numbers have grown over the years by analyzing changes in the FTE. This figure can also be compared to other indicators to assess how many additional workers can be hired to contribute to the company's profitability or revenues.

      • If your business only employs part time workers, you may need to convert their working hours to the full time equivalent.
      • You can use the FTE to compare the number of employees based on revenue or square meters, which can be helpful in making decisions about budgeting and hiring / firing.

      

      Step 4. Calculate the FTE to pay your health service dues

      In some countries, the value of the full-time equivalent affects the determination of the share of taxes to be allocated to the health service. In Italy this does not happen, but it is good to know, in case you have a company abroad, for example in the United States. In some cases it is necessary for a business to employ fewer than 50 FTEs to gain access to certain benefits.

      

      Step 5. Use the FTE to calculate university enrollments

      Some universities and schools, especially private ones, use the concept of the full-time equivalent to calculate and monitor the enrollments of part-time and full-time students. Instead of working hours, those of attendance at lessons are counted. Full-time students are considered to be those with a full load of educational credits (which means more than 12 hours of lessons per week), while those with less than 12 hours per week are considered part-time students. However, each institution or school uses different calculation criteria.