what is the meaning of fte

Any employee having at least 30 working hours per week (or 130 a month) is considered a full-time employee under this act. They also use it to calculate labor costs for the expected project workload and subsequently define the funds needed to finish a project. The full-time employees work 40 hours per week and 52 weeks out of the year, meaning that the number of full-time hours worked on an annualized basis is 104,000 hours. A full-time position would equate to around 30 to 40 hours 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.

what is the meaning of fte

For instance, let’s say a full-time graphic designer working 40 hours per week makes $48,000 per year. A part-time graphic 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. To determine your total FTE, add the total part-time hours worked, plus the total full-time hours worked. 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.

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Essentially, the FTE is the number of determined full-time positions in an organisation. It is used to count employees depending on their degree of employment. Now, the exact number of hours that a 100% FTE represents will depend on your company’s policies and the various labor laws in your state, country, and more. FTE is important for calculating fte meaning labor costs incurred by your company. By determining your company’s overall FTE, you can plan in advance and manage your payroll expenses. Planning a new project and making estimates can be tiresome, especially when you have employees with different types of contracts (part-time, full-time, and freelancers) working for your company.

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. There are some exceptions when calculating FTE for the purposes of the small business tax credit. One FTE equals 2,080 hours per year and the total number of employees is taken into account rather than the number of hours they have worked. Certain employees https://www.bookstime.com/articles/accounting-for-medical-practices are not included in the calculation such as owners, partners, shareholders, family members or relatives, and seasonal workers who work fewer than 120 hours per year. The calculation of full-time equivalent (FTE) is an employee’s scheduled hours divided by the employer’s hours for a full-time workweek. When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are 1.0 FTEs.