What is FTE?

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An abbreviation of Full time equivalent, FTE is a unit that is used to measure the reductions in cost in an organization. Or we can say that a worker’s involvement in a particular project is measured through this unit. There exist some particular eligibility criteria for being a part of FTE calculation every year. Every employee is taken into account while calculating FTE. But there are some employees that are not considered in FTE. Those are the employees who are owners of the business. Any person related to this owner is any way is not allowed to be counted in FTE calculation.


Other than the employees who work on daily basis, there is a group of workers who work seasonally. Here a question arises that can they be included in FTE? The answer is no. They cannot be included in FTE calculation because they do not follow the working condition of 120 days. If a seasonal worker works for 120 days within the taxable year, then he can be considered eligible for FTE. Some employees work part time i.e. they work for some other organization for half day, and in the other half, they work in some other organization. Part time employees are always considered in any FTE calculation. Not only for FTE, are all the part time employees also taken into account while calculating average annual wages. In FTE and average annual wages, employee’s hour of service is considered so that decision making regarding any employee can be made easily, on the basis of his performance and contribution in the team work. For the determination of FTE, every employee must have completed 2080 hours of service. FTE is calculated by adding the employee’s hours of service and dividing it by 2080. If the result you get is not a whole number then the figure is rounded off to the next smallest whole number.