Full-Time Equivalents: What Are They?

To get a good estimate, it’s best to average hours over a 90- or 120-day timeframe. In addition, if you’re calculating FTE for ACA purposes, you’d only include the part-time person in your calculations if they worked 120 days or more per year. In our example, Jimmy and Marta would be considered part-time employees.

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People Analytics Operating Models To Implement

Comparing the full-time equivalent to these other methods helps understand when one metric can be better than another. This would allow the company to better use its time and resources by having multiple people work at specific times throughout the fte meaning finance day rather than just one person working for all eight hours. This will depend on the specific needs of the firm and the requirements of the task. In addition, it helps firms manage their costs, make budgeting provisions and comply with regulations.

A metric shows the difference between two or more numbers, while analysis shows us why something is happening along with the impact. 100% FTE or 1.0 FTE refers to one full-time employee or a number of people who make up the duties of one full-time position. To qualify for PPP loan forgiveness an organization must have maintained the same level of FTE employees during certain specified time periods following the loan disbursement. FTEs are the essential data needed to accurately forecast and manage labor costs across the organization.

Day.io – Overall, the Best Tool for FTE Calculation

Their salary is pro-rata, which means that they are only paid for the hours they have worked. Let’s say you have an upcoming project and you need to determine all your costs. You’re able to establish all of your personnel requirements by calculating FTE. We add the full-time FTE, which as per point 2 is calculated to two, with the part-time FTE. The full-time equivalent is an indicator that answers many of the questions Human Resources departments need answers to. This, therefore allows them to make better decisions regarding personnel management.

(For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting). FTE is a method of calculation to use when you want to accurately forecast specific needs of your business. It’s common when budgeting or managing personnel resources for projects.