What Is Full-Time Equivalent (FTE)?

You have 12 people on the payroll. So how much work is that, really? Three of them are part-time, one's on a four-day week, and a couple share a single role between them. "Twelve" tells you how many faces are in the building — it doesn't tell you how much capacity you actually have, or how much leave you owe.

That's the gap full-time equivalent fills. It's a quietly essential number for planning, budgeting, and — the bit teams forget — working out leave correctly for everyone who isn't on a standard week. Here's what FTE means, how to calculate it, and where it actually matters.

What is full-time equivalent (FTE)?

Full-time equivalent (FTE) expresses a person's working hours as a fraction of a full-time role. One full-timer is 1.0 FTE. Someone working half a full-time week is 0.5 FTE. Add everyone's fractions together and you get your total FTE — a measure of capacity, not headcount.

Headcount counts people. FTE counts the equivalent of full-time roles. The difference is the whole point: two people each working half-time are 2 in headcount but 1.0 FTE — one role's worth of work, split across two pairs of hands.

How to calculate FTE

The formula is simple:

FTE = employee's hours ÷ full-time hours

First, define what "full-time" means at your company — commonly 37.5 or 40 hours a week. That's your denominator. Then divide each person's actual hours by it.

To get total company FTE, sum every individual's FTE.

Worked examples

Say full-time at your company is 40 hours/week. Here's a small team:

Employee	Weekly hours	FTE (hours ÷ 40)
Alex (full-time)	40	1.0
Sam (four-day week)	32	0.8
Priya (part-time)	20	0.5
Jordan (part-time)	16	0.4
Lee (part-time)	8	0.2
Total	116	2.9 FTE

Five people on the payroll — but only 2.9 FTE of capacity. If you'd planned work assuming "five people = five people's output," you'd be badly over-committed.

It works over other periods too. If full-time is 1,800 hours a year and a contractor logs 900, that's 900 ÷ 1,800 = 0.5 FTE for the year. The unit just needs to match top and bottom — hours-per-week over full-time-hours-per-week, or annual over annual.

Why FTE matters

Pro-rata leave

This is the everyday one. If a full-timer gets 25 days of annual leave, a 0.6 FTE part-timer shouldn't get 25 — that would be unfair to the full-timers and expensive for you. They get 0.6 of it: 15 days. FTE is the pro-rata multiplier.

Part-timer's leave = full-time allowance × their FTE

So 25 days × 0.6 = 15 days. The same logic handles mid-year joiners and leavers (combined with the fraction of the year worked). We walk through every case in how to calculate pro-rata holiday entitlement — getting FTE right is step one of getting leave right.

Headcount and capacity planning

When you plan a project or a quarter, FTE tells you real capacity. "We have 30 people" can mean very different amounts of work depending on how many are part-time. Planning against FTE rather than headcount keeps commitments honest.

Budgeting and reporting

Salary budgets, grant applications, and many statutory or funding reports ask for FTE, not headcount — because it's the fair way to compare a team of full-timers with one full of part-timers. It also makes year-on-year comparisons meaningful when your mix of contracts shifts.

A couple of things people get wrong

• FTE isn't a person. 0.5 FTE describes a role's worth of hours, not "half an employee." Two 0.5 FTE staff are two real people with two real leave entitlements — each pro-rated, not pooled.
• Define full-time once, consistently. If you flip between 37.5 and 40 hours as your denominator, your FTE figures won't reconcile. Pick one and apply it everywhere.
• Overtime doesn't push someone past 1.0. FTE is based on contracted full-time hours, not hours actually clocked in a busy week. A full-timer pulling extra hours is still 1.0 FTE.

How Absenca handles it

You shouldn't be doing this arithmetic by hand for every part-timer, every year. Absenca takes each person's working pattern and applies their FTE automatically — so a 0.6 FTE employee is credited 0.6 of the allowance, with the maths done for you. Pro-rata for part-timers and mid-year starters is built in, alongside accruals and carry-over, and balances update the moment a request is approved.

Because each office sets its own working hours and work-days pattern, FTE is calculated against the right definition of full-time for each location — no fudging a single global number. It's free for up to 15 people, then $0.75/user/month.

Frequently asked questions

What does 0.5 FTE mean? It means the role is worth half a full-time position's hours. If full-time is 40 hours a week, 0.5 FTE is 20 hours. It describes hours, not "half a person" — a 0.5 FTE employee is a whole person with their own (pro-rated) leave entitlement.

How do I calculate FTE for a part-time employee? Divide their weekly hours by your full-time weekly hours. Someone on 24 hours where full-time is 40 is 24 ÷ 40 = 0.6 FTE. Use that same fraction to pro-rate their leave allowance.

What's the difference between FTE and headcount? Headcount counts people; FTE counts the equivalent number of full-time roles. Ten people, several part-time, might be 7.5 FTE. Headcount answers "how many staff?"; FTE answers "how much capacity?"

Does FTE affect how much annual leave someone gets? Yes — it's the basis for pro-rata. A part-timer's allowance is the full-time allowance multiplied by their FTE, so a 0.8 FTE employee gets 80% of the full-time days. See how to calculate annual leave entitlement.

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Stop hand-calculating part-time leave. Absenca applies each person's FTE automatically for fair, accurate allowances — free for up to 15 people. Want the full pro-rata method? Read how to calculate pro-rata holiday entitlement.