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Full-time equivalent, or FTE, is a measurement of how many full-time employees or part-time employees make up all of your company's full-time employees. It aids in forecasting workforce requirements and is a statistic required for things like tax credits and adherence to the Affordable Healthcare Act. The method used to calculate FTE depends on the objective. Project managers and business analysts usually use FTE to assess employee expenses and effort. FTE is also a unit of measure that human resources (HR) departments use to standardize part-time employees’ pay and working hours.
Assuming an employee works a standard 8-hour workday and five days per week, the breakdown of an average full-time worker's hours on an annual basis is estimated. After that, the amount is multiplied by the number of weeks worked annually. This is how a business determines the typical annual amount of hours a full-time employee works.