Full-time equivalent definition

Full-time equivalent (FTE) is a way to measure an employee’s work hours. It compares part-time or variable-hour workers to full-time workers. This measurement helps companies understand total work hours and make sure they have the right number of staff and resources. It makes planning and allocating resources simpler and clearer.

What is the purpose of a full-time equivalent?

The purpose of Full-Time Equivalent (FTE) is to help companies in many ways. It is used to understand how much work an employee does and how much they contribute to a project. This is done by turning part-time or different work hours into standard full-time hours. This helps companies know if they have enough staff and if projects are going well.

FTE is also very important for figuring out salaries and paying employees the right amount, no matter how many hours they work. This helps companies keep track of costs and manage their money better. In short, FTE is a helpful tool for companies to make sure they have the right number of workers and to manage their finances effectively.

How to calculate an FTE?

To calculate Full-Time Equivalent (FTE), divide an employee’s scheduled hours by the company’s weekly full-time scheduled hours. 

For example, if a company considers 40 hours as full-time, an employee working 20 hours per week is 0.5 FTEs. If John works 25 hours in a 38-hour full-time schedule, he’s 0.66 FTEs. A 100% FTE means either one person working full-time or several people fulfilling one full-time role.

The formula: 

FTE = Company’s Full-Time Scheduled Hours / Employee’s Scheduled Hours

For example:

40/20 =0.5 FTEs

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