Full-Time Equivalent (FTE) is a unit of measurement used to determine the amount of full-time hours worked by all employees in an organization. It is a way to convert the total hours worked by part-time employees into the equivalent number of full-time employees. FTE is most widely used by companies to determine their employees’ workload, with the perspective of trying to determine how many part-time employees and the hours they work add up to the same number of hours worked by full-time employees.

To calculate FTE, you need to divide the total number of hours worked by an employee by the number of hours worked by a full-time employee in a week. For example, if a full-time employee works 40 hours per week, and a part-time employee works 20 hours per week, the FTE for the part-time employee would be 0.5 (20 divided by 40) .

FTE is important for several reasons, including budgeting, benefits administration, and legal purposes. It allows companies to evaluate their hiring capacity and current payroll, as well as for reporting purposes related to labor laws and employee benefit programs. FTE can also help identify the number of full- and part-time workers an organization can hire, as well as the number of hours they should work.