What is full-time equivalent (FTE) & how to calculate it?

If you manage people, plan budgets, forecast projects, or report on your workforce, you’ve probably come across the term ‘full-time equivalent’. It sounds technical, but FTE is actually one of the most practical ways to measure how your employees collectively perform.

Rather than simply counting heads, full-time equivalent (FTE) looks at the hours worked and converts them into a standardized unit. That measurement allows your organization to compare staffing levels, workload, and resources across departments, time periods, and industries.

In this guide, we'll break down:

• What full-time equivalent FTE really means
• How an FTE calculation works step by step
• The difference between full-time employees and part-time employees in FTE terms
• Why FTE is a critical key metric for modern business operations
• Real-world examples you can apply immediately

What does full time equivalent mean?

At its core, full-time equivalent is a way to express the total number of hours worked by all employees as if they were performed by full-time staff only.

Instead of saying:

“We have 18 people,”

you say:

“We have 12.4 FTE.”

That number reflects time equivalent work, not just the number of people. In other words, FTE converts labor into an equivalent number of full-time roles.

The basic idea

One FTE (often written as one FTE) represents the hours per week or hours per year that a single full-time employee works on a standard full-time schedule.

So:

• 1 person working full-time hours = one FTE
• 2 people each working half of those hours each = one FTE
• A mix of part-time and full-time staff can still equal the same FTE total

This is why FTE is considered a standardized unit of labor measurement.

What counts as 'full time'?

The definition of ‘full time’ varies by employer, country, and sometimes law. However, it is generally tied to a set number of hours per week.

Common full-time hours include:

• 35 hours per week
• 37.5 hours per week
• 40 hours per week

These are often referred to as full-time hours or full-time hours worked under a full time schedule.

For example, in many U.S. contexts tied to the Affordable Care Act, full time is defined as 30 hours per week on average. In other environments, 40 is the maximum number used as the benchmark.

The important thing: FTE uses whatever your organization has defined as normal full time hours.

Why full-time equivalent matters

Using full-time equivalent instead of simple headcount helps a company or corporation make more informed decisions about staffing and strategy.

1. Workforce planning

FTE helps an employer understand the real size of their workforce. Ten part-time employees might represent only 5 FTE. Without FTE, the workload might look larger than it actually is.

2. Budgeting & costs

Labor is usually the biggest line in a budget. By tracking FTE, a business can better determine:

• Salary and wage costs
• Overtime trends
• Whether to employ more staff or redistribute work hours

3. Benefits & eligibility

Some benefits programs or compliance requirements depend on the number of full time or FTE employees. FTE can affect whether an organization must offer certain coverage or whether workers qualify for specific programs.

4. Project management

When planning a project, leaders often estimate in FTE:

“This initiative will require 2.5 FTE for six months.”

That communicates the total number of hours needed more clearly than listing job titles alone.

Full-time employees vs part-time employees in FTE

A common misconception is that FTE equals headcount. It doesn’t.

Full-time employees

A full-time worker on a standard full-time schedule is typically counted as 1.0 FTE, assuming they work the expected number of hours worked for that role.

If someone works slightly less than full time hours, their FTE might be 0.9 or 0.95, depending on the calculation.

Part-time employees

Part-time employees are where FTE becomes especially useful. Instead of ignoring them or counting them equally with full time employees, FTE converts their actual hours worked into fractions of a full time role.

For example:

• One person working 20 hours per week in a 40-hour system = 0.5 FTE
• Two employees working 10 hours per week each = 0.5 FTE combined

This way, part time staff are fairly counted in workforce planning.

The basic FTE formula

The FTE calculation is surprisingly simple.

Step 1: Determine full-time hours

First, identify your standard full time hours over a specific period. This might be:

• 40 hours per week
• 2,080 hours per year (40 × 52)

Step 2: Add up total hours worked

Next, calculate the total hours worked by all employees in that same period.

This includes:

• Full time staff
• Part time staff
• In some cases, compensable hours under specific rules or contract terms

You’re looking for the total number of hours.

Step 3: Divide

Now comes the key step: dividing.

$\mathrm{FTE}=\frac{\mathrm{Total\; Hours\; Worked}}{\mathrm{Full\; Time\; Hours\; for\; the\; Period}}$

That’s the core calculation behind full time equivalent.

Simple FTE example

Let’s walk through a practical example for a company over one week.

Assume full time hours = 40 hours per week.

Your team:

• 3 full time employees working 40 hours each
• 2 part time employees working 20 hours each

Step 1: Total hours

• 3 × 40 = 120
• 2 × 20 = 40

Total hours worked = 160

Step 2: Divide by full time hours

$160÷40=4$

Your workforce equals 4 FTE, even though you have 5 people.

This shows how FTE reflects labor equivalent rather than headcount.

More complex example: Mixed hours

Now imagine a business during a busy project:

• 4 full time employees at 40 hours per week
• 3 part time employees at 25 hours per week
• 1 part time employee at 10 hours per week

Total hours worked:

• 4 × 40 = 160
• 3 × 25 = 75
• 1 × 10 = 10

Total = 245

Therefore the FTE is:

$245÷40=6.125$

So the organization effectively has 6.125 full time equivalent employees.

FTE over a year

FTE is often calculated over the previous calendar year for reporting.

If full time equals 2,080 hours annually:

$\mathrm{FTE}=\frac{\mathrm{Total\; Hours\; Worked\; in\; the\; Year}}{\mathrm{2,080}}$

This approach is common in large corporations, government reporting, and compliance tied to law or regulation.

FTE in education

FTE isn’t limited to employment. In education, it’s also used for students.

A student enrolled in a normal course load might be considered 1.0 FTE. If a student’s actual enrollment is half that load, they may count as 0.5 FTE for funding and planning purposes.

This shows how time equivalent thinking applies across various contexts, not just the workplace.

Key Considerations when calculating FTE

1. Define your standard clearly

Your FTE figure depends entirely on how full time is defined in your organization. Is it 35, 37.5, or 40 hours per week?

2. Use consistent periods

Always compare the same period—week, month, or year—on both sides of the calculation.

3. Include the right hours

Decide which hours count, i.e:

• Regular work hours
• Overtime
• Certain types of compensable hours

Consistency is critical.

4. Track accurately

Reliable time data is essential. Systems that track the number of hours worked across roles and teams make FTE far more accurate.

How FTE supports better decisions

When used correctly, full-time equivalent FTE becomes a powerful key metric.

It helps leaders:

• Determine hiring needs
• Balance workload across teams
• Plan staffing for a new project
• Align resources with strategic goals
• Understand the real labor capacity of the company

Instead of guessing based on the total number of employees, FTE shows the true measurement of work capacity.

Full-time equivalent transforms scattered hours worked into a clear, comparable unit. By calculating FTE, an employer or organization can see beyond headcount to understand the real size and strength of its workforce.

Whether you’re running a small business, managing a large corporation, or planning in education, FTE helps you:

• Measure labor
• Make informed decisions
• Align staffing with budget, strategy, and project demands

In short, FTE turns the abstract concept of “people working” into a precise, actionable number—one of the most practical yet underrated tools for modern workforce planning.