Vareto Finance Glossary

Full-Time Equivalent (FTE)


Full-Time Equivalent (FTE) is a metric that represents the total hours regularly worked by a company's full-time employee. It represents a unit that showcases the extent of involvement or work done by an employee. In simple terms, FTE is equal to the total work carried out by one full-time employee of a company.


FTE is generally 2,080 hours, which translates into 8 hours per day and 5 days per week.The standardized FTE figure is 1.0, which refers to the 100% capacity of a full-time employee and 0.5 is used for part-time employees.

Why it matters

FTE is used by companies to calculate their human resource requirements for a project or period. With the help of FTE, companies can also estimate the net cost of salaries or labor. It is a commonly used metric for budgeting and planning exercises. FTE also helps in easy task scheduling by converting workload hours into the number of headcount required. Managers also use FTE to gauge the cost of overtime and its cost-effectiveness over a period.