Full-Time Equivalent (FTE) Calculator

Full Time Equivalent (FTE) is a standard workforce measurement that converts the total hours worked by part-time employees into equivalent full-time positions. This metric helps organizations, government agencies, and healthcare administrators standardize employee counts, allocate resources, determine benefit eligibility, and comply with various regulations.

What is full time equivalent?

Full Time Equivalent (FTE) represents the total number of full-time positions that the hours worked by all employees would create. One FTE equals the hours worked by one full-time employee during a specific period, typically calculated on an annual or monthly basis.

For example, if your standard full-time workweek consists of 40 hours, then one FTE represents 2,080 hours per year (40 hours × 52 weeks). Any combination of employees working these hours collectively counts as one FTE, regardless of how many individual workers are involved.

Basic FTE calculation formula

The fundamental FTE calculation formula is:

$$\text{FTE} = \frac{\text{Total Hours Worked by All Employees}}{\text{Standard Full-Time Hours per Period}}$$

For annual calculations:

$$\text{Annual FTE} = \frac{\text{Total Annual Hours Worked}}{\text{Standard Annual Full-Time Hours (typically 2,080)}}$$

For monthly calculations:

$$\text{Monthly FTE} = \frac{\text{Total Monthly Hours Worked}}{\text{Standard Monthly Full-Time Hours (typically 173.33)}}$$

Why FTE matters

FTE serves multiple important purposes across different sectors:

1. Resource planning and budgeting

FTE calculations help organizations plan staffing needs, allocate budgets, and determine optimal workforce size based on workload requirements.

2. Legal compliance

Many laws and regulations use FTE as a threshold for determining applicability, including the Affordable Care Act (ACA), Family and Medical Leave Act (FMLA), and various labor laws.

3. Performance benchmarking

FTE enables organizations to compare productivity and efficiency across departments, locations, or time periods on a standardized basis.

4. Cost analysis

Understanding FTE helps calculate true staffing costs, including benefits and overhead, for better financial planning.

5. Healthcare reporting

Under the ACA, employers must calculate FTE to determine if they qualify as an "applicable large employer" subject to specific healthcare requirements.

FTE calculation methods

Different methods exist for calculating FTE depending on your needs:

Standard hours method

This method divides total hours worked by the standard full-time hours:

$$\text{FTE} = \frac{\text{Sum of All Employee Hours}}{\text{2,080 (or other standard)}}$$

Example: If three part-time employees work 20, 25, and 15 hours per week respectively:

• Total weekly hours: 60
• Annual hours: 60 × 52 = 3,120
• FTE: 3,120 ÷ 2,080 = 1.5 FTE

Simplified headcount method

This method counts full-time employees as 1.0 FTE and part-time employees as 0.5 FTE, regardless of actual hours:

$$\text{FTE} = \text{Number of Full-Time Employees} + (\text{Number of Part-Time Employees} \times 0.5)$$

Hours-based averaging method

This method calculates average hours worked per employee, then converts to FTE:

$$\text{Average FTE per Employee} = \frac{\text{Average Weekly Hours per Employee}}{40}$$ $$\text{Total FTE} = \text{Number of Employees} \times \text{Average FTE per Employee}$$

Common FTE calculation scenarios

Scenario 1: Mixed workforce

Company with:

• 5 full-time employees (40 hours/week)
• 8 part-time employees (15 hours/week average)

Calculation:

• Full-time FTE: 5 × 1.0 = 5.0
• Part-time total hours: 8 × 15 × 52 = 6,240 annual hours
• Part-time FTE: 6,240 ÷ 2,080 = 3.0
• Total FTE: 5.0 + 3.0 = 8.0 FTE

Scenario 2: Variable hours

Department with fluctuating schedules:

• Employee A: 40 hours/week
• Employee B: 30 hours/week
• Employee C: 25 hours/week
• Employee D: 15 hours/week

Calculation:

• Total weekly hours: 110
• Annual hours: 110 × 52 = 5,720
• FTE: 5,720 ÷ 2,080 = 2.75 FTE

Scenario 3: Seasonal workers

Business with seasonal fluctuations:

• Peak season: 15 employees averaging 35 hours/week
• Off-season: 8 employees averaging 40 hours/week

Annual FTE calculation:

• Peak season (3 months): 15 × 35 × 13 = 6,825 hours
• Off-season (9 months): 8 × 40 × 39 = 12,480 hours
• Total annual hours: 19,305
• FTE: 19,305 ÷ 2,080 = 9.28 FTE

FTE vs. headcount

Understanding the difference between FTE and headcount is crucial:

Headcount

• Counts individual employees
• Doesn't reflect actual work capacity
• Easier to track and understand
• Better for basic staffing reports

FTE

• Measures work capacity
• Reflects actual labor hours
• More accurate for budgeting
• Better for capacity planning

Example comparison:

• Company A: 20 headcount (10 full-time, 10 part-time at 20 hours)
• FTE: 10 + (10 × 0.5) = 15 FTE
• Actual work capacity: 15 full-time positions

Frequently asked questions about FTE

How do I calculate FTE for irregular schedules?

Track actual hours over a representative period (typically 12 months) and divide by the standard full-time hours for that period.

Do I include overtime in FTE calculations?

Generally, yes. FTE represents total work capacity, so all hours worked should be included.

Can FTE be greater than headcount?

Yes, when employees work more than full-time hours or significant overtime, total FTE can exceed headcount.