Full-time equivalent (FTE)

What it is

A full-time equivalent (FTE) is a unit that turns the hours worked by all employees into the number of full-time people those hours add up to. One FTE equals the hours of one full-time employee.

A full-time worker counts as 1.0 FTE. Someone working half those hours counts as 0.5 FTE. This lets you compare teams and budgets fairly, even when many people work part time.

Why it matters

Headcount alone can be misleading. Ten part-time staff do not do the same amount of work as ten full-time staff. FTE gives a truer picture of how much capacity you actually have.

That makes it useful for headcount planning, budgeting, workload decisions and metrics such as revenue per FTE. In some countries, FTE counts are also used to decide whether certain employment rules or reporting duties apply, and those rules vary, so check what applies to you.

FTE also helps when you compare teams or locations. A store with 30 part-time staff and an office with 15 full-time staff may look very different on paper, yet both could have about the same number of FTEs. Looking at FTE makes cost per employee, workload per person and staffing ratios much easier to compare, and it stops part-time heavy teams from looking overstaffed.

How it works

First decide how many hours count as full time in your company, for example 40 hours a week. Then use this formula:

• FTE = total hours worked by all employees in the period / full-time hours for the same period
• For one person: individual FTE = their scheduled weekly hours / full-time weekly hours
• Annual full-time hours are often set at 2,080 (40 hours x 52 weeks), though some companies remove holidays.

Example: a clinic sets full time at 40 hours a week. It has 6 full-time staff (240 hours), 4 people working 20 hours (80 hours) and 2 people working 10 hours (20 hours). Total weekly hours are 340. FTE = 340 / 40 = 8.5. So the clinic has 12 employees on payroll but 8.5 FTEs of capacity.

Best practices

• Write down your full-time hours definition and use it in every report.
• Report headcount and FTE side by side so leaders see both.
• Decide early whether to include contractors and temps, and label them clearly as part of your contingent workforce.
• Use FTE, not headcount, when you plan budgets in workforce planning.
• Keep hours data current in your HR system so FTE numbers stay accurate. Tools for people analytics and HR analytics can do the math automatically.

Common mistakes

• Using different full-time hours in different teams without saying so.
• Counting scheduled hours in one report and actual hours in another.
• Counting people on long leave twice, once for them and once for their cover.
• Assuming the legal FTE rules of one country apply everywhere.

FAQ

What is the difference between FTE and headcount?

Headcount is the number of people on payroll. FTE is the number of full-time workloads those people add up to. A team of 3 people working half time is a headcount of 3 but 1.5 FTE.

How many hours is 1 FTE?

It depends on how your company defines full time. Many use 40 hours a week or about 2,080 hours a year, but 35 or 37.5 hours are also common.

Can one person be more than 1.0 FTE?

Usually no. Most companies cap a person at 1.0 FTE even if they work overtime, and track overtime separately. This is general information, not legal advice.