Question

1. Does the calculation of an FTE include productive and non-      CH 9      (3)

Productive hours?

Answer 1

FTE stands for full-time equivalent and it represents the number of working hours that one full-time employee completes during a fixed time period, such as one month or one year. FTE converts workload hours into the number of people required to complete that work, which can help to simplify scheduling. FTE also helps budget analysts and project managers estimate the cost of labor. Managers may also benefit from looking at FTE to determine if overtime costs are making it worthwhile to open up a new full-time or part-time position.

FTEs are 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. It is critical for accounting purposes and determining wages, and for calculating the company’s expenses when paying its workers.

Yearly, a company generally considers an FTE to be valued at 2,080 hours. To delve further into the matter, let’s look at how FTEs are calculated.

Calculating FTE's

The breakdown for an average, full-time worker and their hours on an annual basis is calculated by assuming the worker follows an 8-hour workday and works five days out of the week:

8 hours per day x 5 days per week = 40 hours

The figure is then multiplied by the number of weeks worked every year:

40 hours per week x 52 weeks per year = 2,080 hours

This is how a company, on average, calculates the average yearly number of hours that a full-time employee works.