What is it?
Full-Time Equivalent (FTE) is a unit of measurement that represents the number of full-time hours worked by employees, allowing organisations to quantify their workforce in terms of full-time positions. In Australia, one FTE typically equates to 38 hours per week, the standard full-time workweek as defined by the Fair Work Act 2009. FTE calculations are used to determine staffing levels, manage labour costs, and assess employee productivity. For example, two part-time employees each working 19 hours per week would together make up 1.0 FTE (19 + 19 = 38 hours, or 1.0 FTE). How FTE is Calculated:some text
- FTE Calculation for Full-Time Employees: Each full-time employee typically counts as 1.0 FTE.
- FTE Calculation for Part-Time Employees: Part-time employees' hours are aggregated to determine their contribution to the total FTE count. For example, an employee working 19 hours per week in a 28-hour workweek setup would be counted as 0.5 FTE.
Why is it important?
- Workforce Planning and Budgeting: FTE calculations help organisations allocate resources efficiently, allowing accurate staffing projections and labour cost management. It assists in understanding the number of full-time employees or equivalents required to meet operational needs.
- Cost Management: By determining FTEs, companies can control labour costs, ensuring they maintain appropriate staffing levels without overspending.
- Benchmarking and Productivity: FTE metrics allow management to assess productivity by comparing output against a standard full-time workload, helping identify if staffing levels match workload requirements and performance goals.
- Flexibility in Staffing: FTE calculations enable organisations to integrate part-time, full-time, and casual employees into a single metric, providing flexibility in workforce management while meeting budgetary goals.
