FTE
FTE (Full-Time Equivalent) is a unit of measurement that represents one full-time employee, used to convert part-time hours into equivalent full-time positions.
hr-metrics
Category
beginner
Difficulty
3 min read
Read time
2025-01-15
Updated
Definition
Short definition
FTE (Full-Time Equivalent) is a unit of measurement that represents one full-time employee, used to convert part-time hours into equivalent full-time positions.
Detailed explanation
FTE is a standardized way to measure workforce capacity that accounts for varying work patterns. One FTE represents the hours worked by a full-time employee, typically 37.5 or 40 hours per week.
Part-time employees are represented as fractions of an FTE. For example, an employee working 20 hours in a 40-hour week organization would be 0.5 FTE. This allows organizations to compare workforce capacity regardless of work patterns.
FTE is essential for budgeting, workforce planning, statutory reporting, and calculating ratios like revenue per FTE.
Practical guidance
How it works
Define standard full-time hours. For each employee, divide their contracted hours by full-time hours. Sum all individual FTEs for total organizational FTE.
Best practices
Define full-time hours clearly
Update FTE when hours change
Use for workforce planning
Calculation details
Formula
FTE = Employee Hours / Full-Time Hours
Variables
E: Employee Hours
F: Full-Time Hours
Worked example
30 / 40 = 0.75
Result: Employee = 0.75 FTE
Frequently asked questions
What is the difference between FTE and headcount?
Headcount is the number of employees regardless of hours worked. FTE represents actual working capacity. A company with 10 half-time employees has headcount of 10 but FTE of 5.
Related glossary terms
Headcount
Headcount is the total number of employees in an organization, counting each person once regardless of their working hours or employment type.
Pro-Rata
Pro-rata means calculating entitlements proportionally based on hours worked or time employed, commonly used for part-time employees or mid-year starters.