Full Time Equivalent
What is full-time equivalent (FTE)?
Full-time equivalent (FTE) converts the hours worked by all employees into the number of full-time employees those hours represent. It lets a firm compare staffing levels fairly when some people work part time or only part of the year. One FTE equals the hours of one full-time employee in the same period.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that connects payroll hours to the right departments and projects, so FTE counts tie to what the firm actually pays.
How to calculate FTE
FTE = total hours worked by all employees ÷ hours for one full-time employee
The full-time standard is set by the firm or by the rule being applied. Many firms use 40 hours a week, or about 2,080 hours a year.
Worked example
The figures below are illustrative. A firm has two full-time employees at 40 hours a week and three part-time employees at 20 hours a week.
- Full-time hours: 2 × 40 equals 80
- Part-time hours: 3 × 20 equals 60
- Total hours: 140 per week
- FTE: 140 ÷ 40 equals 3.5
The firm has five people but 3.5 FTE.
How firms use FTE
- Staffing plans and the headcount budget
- Productivity measures such as revenue per FTE, alongside labor cost percentage
- Comparing capacity and billable utilization across teams
- Estimating all-in labor cost for a position, including benefits
Some regulations and benefit programs define full time differently, so confirm the definition that applies before using FTE for compliance. See our payroll services for related support.
Frequently asked questions
Is FTE the same as headcount?
No. Headcount counts people, while FTE counts the workload they represent. Five people working part time may equal fewer than five FTE. Use headcount for people-based processes such as benefits enrollment, and use FTE for workload, cost, and productivity analysis.
How do you calculate FTE for seasonal or temporary workers?
Convert their hours to a common period. For example, a worker employed for three months at 40 hours a week contributes about 0.25 FTE for the year, because three months is a quarter of the year. Add the converted amounts for all workers to get the annual total.