This article gives you an overview of the full-time equivalent (FTE) calculation formula and use cases used in our dashboard.
What are Full-Time Equivalents?
FTE's show your employees' full-time equivalent based on their weekly working hours and are used to measure work performance in a standardized form. This metric allows HR teams to accurately record and analyze the actual number of full-time workers needed to complete the workload. This allows staff planning, budgeting and resource allocation to be made more efficient.
How do we calculate FTEs?
The starting point is always the consideration of a specific period of time, the working hours of an employee per week and the weeks of working time for full-time employees.
1. Example using a permanent employment agreement
Anna will start her new permanent job on January 1st, 2024. Her working hours per week are 35 hours with a 40-hour full-time week.
The period in which we want to calculate Anna's FTE is January 1st, 2024 - December 31st, 2024. Since Anna will continue to be employed after December 31, 2024 due to her permanent employment contract, the FTE formula is as follows:
This results in the following calculation for Anna:
FTE = 35/40 = 0.88 FTE
2. Example based on a terminated employment agreement in the middle of the month
Paul will also start his new permanent job on January 1st, 2024. His working hours per week are 40 hours in a 40-hour full-time week. After 6 months he resigned and will end his employment relationship on June 15, 2024.
The period in which we want to calculate Paul's FTE is also January 1st, 2024 - December 31st, 2024. However, since Paul resigned after 6 months, we have to calculate the FTE's pro rata so that the FTE formula is as follows:
This results in the following step-by-step calculation for Paul:
Step 1
For January 1st to June 1st, the calculation remains as in the first example:
FTE = 40 hrs / 40 hrs = 1 FTE
Step 2
The monthly calculation of his FTE in June is calculated pro rata because he is only employed for the first half of the month (up to and including June 15, 2024).
Therefore, the following observation period results for this month:
full_period = period_end - period_start
full_period = 06/30/2024 - 06/01/2024 = 30 days
Now we need to understand how long Paul was available that month in order to calculate a prorated availability:
time_delta = full_period - start_reduction - end_reduction
The start_reduction is relevant if someone was hired in the middle of the month, which is not the case in Paul's example.
The end_reduction comes into effect if the employment relationship ends in the middle of the month. This applies to Paul.
Step 3
The following proportional calculation results:
start_reduction = 0 days
end_reduction = 06/30/2024 - 06/15/2024 = 15 days
time_delta = 30 days - 15 days = 15 days
FTE = 15 days / 30 days * 40h / 40h = 0.5 FTE
Result
For January 1, 2024 to May 30, 2024, Paul has 1 FTE.
For June 1st, 2024 to June 30th, 2024, Paul has 0.5 FTEs pro rata.
From July 1st, 2024 until the end of the originally selected period (December 31st, 2024), 0 FTEs will be counted for Paul.
Can standardized months also be used for the FTE calculation in the beyobie dashboard?
Yes, in order to set all months the same for the FTE calculation, there is the option of a standardized FTE calculation in the beyobie dashboard, which is treated as follows:
Full time Day = 8 hours
Full time week = 40 hours.
Full time Month = 173.33 hours
Full time year = 2080 hours.