TL;DR
- A full-time equivalent, or FTE, is a unit that makes workers on different hours comparable. One full-time person is 1.0 FTE. Someone working half the full-time hours is 0.5 FTE.
- The formula is hours worked divided by full-time hours. Add the results for everyone, and you have the FTE of a team. Ten people can be anything from a little over zero to 10.0 FTE.
- Use headcount for anything that is per person, such as laptops or reviews, and FTE for anything that depends on hours, such as capacity and salary budgets. Some laws define their own FTE calculation.
A manager says that the team has twelve people. The finance partner says that it has 9.4. Both are right. One is counting heads, and the other is counting full-time equivalents.
This article gives the definition of full-time equivalent, the formula, four worked examples, the difference between FTE and headcount, an official US rule that uses its own calculation, and the mistakes that most often make FTE figures misleading.
Whatever their hours, every person needs clear goals and a fair review. See how New Dynamics Goals & OKRs keep goals visible for full-time and part-time colleagues alike.
What is a full-time equivalent?
Eurostat, the statistical office of the European Union, defines a full-time equivalent as “a unit to measure employed persons or students in a way that makes them comparable although they may work or study a different number of hours per week”.
It goes on: “A full-time person is therefore counted as one FTE, while a part-time worker / student gets a score in proportion to the hours he or she works or studies.” Its example is a part-time worker employed for 20 hours a week where full-time work is 40 hours, who “is counted as 0.5 FTE”.
The UK's Office for National Statistics explains why the measure is useful. In the methodology for its public sector employment statistics, it says that full-time equivalents “provide a better indication of total labour input than a simple headcount”.
So FTE answers a different question from headcount. Headcount asks how many people there are. FTE asks how much work those people are contracted to do.
The FTE formula
FTE = hours worked ÷ full-time hours
There are three steps.
- Choose the full-time hours. Use your organisation's standard full-time week, such as 37.5 or 40 hours. There is no universal figure. GOV.UK says of the UK: “There is no specific number of hours that makes someone full or part-time, but a full-time worker will usually work 35 hours or more a week.”
- Divide each person's contracted hours by that figure. Someone on 30 hours in a 40-hour organisation is 0.75 FTE.
- Add the results. The total is the FTE of the team, department or organisation.
Worked examples
All four examples use a full-time week of 40 hours. The people and figures are invented.
1. One part-time employee
Sam works 24 hours a week. 24 ÷ 40 = 0.6 FTE.
2. A team
| Person | Weekly hours | FTE |
|---|---|---|
| Ana | 40 | 1.0 |
| Ben | 40 | 1.0 |
| Chloe | 32 | 0.8 |
| Dev | 20 | 0.5 |
| Ewa | 16 | 0.4 |
| Total: 5 people | 148 | 3.7 |
The headcount is 5. The FTE is 3.7. A quicker route gives the same answer: 148 total hours ÷ 40 = 3.7.
3. A part-year worker
Finn works 40 hours a week, but joins on 1 July. Over the calendar year Finn is 1.0 FTE for six months, which averages 0.5 FTE for the year. For annual budgets and reports, average the FTE over the period.
4. A salary budget
A role has a full-time salary of £40,000. Offered at 0.6 FTE, it pays £24,000 pro rata. GOV.UK gives the same logic for benefits: if a full-time worker gets a £1,000 bonus, a part-time worker on half the hours “should get £500”.
FTE and headcount: which to use
| Use headcount for | Use FTE for |
|---|---|
| Laptops, licences and desks per person | Capacity planning and workload |
| Performance reviews and one-to-ones | Salary and staffing budgets |
| Training places and onboarding | Productivity ratios, such as revenue per FTE |
| Manager spans of control | Comparing teams with different working patterns |
| Diversity and turnover reporting | Benchmarking against other organisations |
The middle rows matter for HR. A manager with ten part-time reports still has ten reviews to write, ten sets of goals to agree and ten people to know, even if the team is only 5.0 FTE. Workload for managers follows headcount. Our guide to strategic workforce planning uses both measures.
When you report either number, say which one it is. “The department grew by 8” means little until the reader knows whether that is people or FTE.
When the law defines FTE for you
Some laws use FTE as a threshold, and define their own way to calculate it. When they do, the legal formula replaces your internal one for that purpose.
A clear example comes from the United States. Under the Affordable Care Act, the Internal Revenue Service explains how to work out whether an employer is an applicable large employer, which means one with at least 50 full-time employees, including full-time equivalent employees, on average during the prior year. For this purpose:
- a full-time employee is one who has “on average at least 30 hours of service per week during the calendar month”, or at least 130 hours of service during the month;
- a full-time equivalent employee is “a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee”;
- to count them for a month, the employer combines the hours of all employees who are not full-time, counting no more than 120 hours for each, and divides the total by 120.
Notice that this is a different calculation from the general formula above: it uses monthly hours, a fixed divisor and a 30-hour definition of full-time. Grant funders, government returns and other schemes often set their own rules in the same way. Always check the definition in the scheme you are reporting under. This is general information, not legal or tax advice.
Part-time workers are not “less than one”
FTE is a measure of hours. It is not a measure of a person's value, commitment or rights.
GOV.UK's guide to part-time workers' rights says that part-time workers “are protected from being treated less favourably than equivalent full-time workers just because they're part time”. They should get the same treatment for pay rates, pension opportunities, holidays, training and career development, and selection for promotion. Some benefits are applied pro rata.
In practice that means:
- set goals that fit the contracted hours. A 0.6 FTE role should carry roughly 0.6 of the workload, which is the step most often missed when someone reduces their hours;
- judge performance on results within those hours;
- include part-time colleagues in training, stretch work and promotion decisions;
- schedule team meetings on days when they work.
This describes UK government guidance, and is not legal advice.
Five common mistakes with FTE
- Mixing the two numbers. A report that uses headcount on one page and FTE on the next, without labels, will mislead someone.
- Using the wrong full-time hours. If one site works 37.5 hours and another 40, decide which standard applies before you add them up.
- Counting overtime. FTE is normally based on contracted hours, so a full-time person who works extra hours is still 1.0. Sustained overtime is a workload signal, which we cover in our guide to time off in lieu.
- Ignoring timing. A snapshot on one day differs from an average over the year. Say which you are reporting.
- Treating contractors inconsistently. Decide whether agency staff and contractors are in or out, and say so. The ONS, for example, excludes self-employed, contract and agency workers from its public sector figures.
Frequently asked questions
What is the definition of full-time equivalent?
A full-time equivalent, or FTE, is a unit that makes workers with different hours comparable. One full-time worker counts as 1.0 FTE, and a part-time worker counts in proportion to their hours. Someone working 20 hours where full time is 40 hours is 0.5 FTE.
How do you calculate FTE?
Divide the hours a person works by your organisation's full-time hours. For a team, add up everyone's weekly hours and divide the total by the full-time hours. Five people working 148 hours in total, in a 40-hour organisation, are 3.7 FTE.
What is the difference between FTE and headcount?
Headcount is the number of people. FTE is the amount of contracted working time, expressed in full-time units. Ten people who each work half-time are a headcount of 10 and an FTE of 5.0.
How many hours is 1.0 FTE?
It depends on the employer. 1.0 FTE equals whatever the organisation treats as full-time, often between 35 and 40 hours a week. GOV.UK says that there is no specific number of hours that makes someone full-time in the UK.
What does 0.5 FTE mean?
It means half of a full-time role. In an organisation with a 40-hour full-time week, 0.5 FTE is 20 hours a week. Pay and many benefits are usually calculated pro rata, so a 0.5 FTE role pays half the full-time salary.
Is FTE calculated the same way everywhere?
No. The general formula is the same, but some laws and funding schemes define their own method. The US Affordable Care Act, for example, counts full-time equivalent employees by dividing the monthly hours of non-full-time employees by 120.
Your next step: label your numbers
- Find the last workforce report you sent or received, and check whether each figure is headcount or FTE.
- Write down the full-time hours your organisation uses as the divisor.
- Calculate your own team's FTE, and compare it with the headcount.
- For anyone working reduced hours, check that their goals were reduced to match.
For a wider view of planning and managing a workforce, read and download our human resources management guide. The guide is free to read, and the PDF uses our short download form.
Want goals and reviews that work for every working pattern? Book a New Dynamics demo and bring your team structure. You can also email contact@new-dynamics.com.
