Full-Time Equivalent (FTE) is a standardised measurement that converts the working hours of part-time, casual, and contract employees into the number of full-time positions they represent. This metric enables organisations to calculate their total workforce capacity by expressing all employee hours as equivalent full-time positions, providing a consistent basis for workforce planning, budgeting, compliance reporting, and resource allocation across different employment types and working arrangements.

Core calculation methodology for FTE

Basic FTE calculation

FTE is calculated by dividing an employee’s total working hours by the standard full-time hours for the organisation:

FTE = Employee’s Annual Hours ÷ Standard Full-Time Annual Hours

For example, if an organisation defines full-time as 38 hours per week (1,976 hours annually), an employee working 19 hours per week would represent 0.5 FTE.

Organisational FTE calculation

To determine total organisational FTE:

1. Calculate individual FTE for each part-time and casual employee
2. Add the number of full-time employees (each counting as 1.0 FTE)
3. Sum all individual FTE calculations to determine total workforce FTE

Standard working hours in Australia

Most Australian organisations use 38 hours per week as the standard full-time equivalent, based on the Fair Work Act 2009 definition of ordinary hours. This equates to 1,976 hours annually (38 hours × 52 weeks), though some organisations may use 40 hours per week depending on their industry or enterprise agreements.

Types of FTE applications

Workforce planning FTE

Used for strategic planning, recruitment forecasting, and capacity management. This application helps organisations understand their actual workforce capacity and plan for future staffing needs based on business growth or contraction.

Financial reporting FTE

Applied in budgeting, cost analysis, and financial reporting to standardise labour costs across different employment types. This enables accurate comparison of workforce costs between departments, projects, or reporting periods.

Compliance FTE

Required for regulatory reporting, including superannuation guarantee calculations, workplace safety obligations, and various government reporting requirements that use FTE as a measurement basis.

Project-based FTE

Calculated for specific projects or initiatives to determine resource requirements and allocate appropriate staffing levels. This helps project managers understand how many full-time equivalent resources are needed to complete deliverables.

Annual FTE vs point-in-time FTE

Annual FTE measures the average full-time equivalent staff over a 12-month period, while point-in-time FTE represents the workforce at a specific date. Different reporting requirements may specify which calculation method to use.

FTE in different employment arrangements

Permanent full-time employees

Count as 1.0 FTE regardless of slight variations in weekly hours, provided they work the organisation’s designated full-time schedule.

Permanent part-time employees

Calculated based on their contracted hours as a proportion of full-time hours. A part-time employee working 3 days per week in a 5-day full-time environment represents 0.6 FTE.

Casual employees

FTE calculated based on actual hours worked during the measurement period, divided by standard full-time hours for the same period. This can vary significantly between different measurement periods.

Contract and temporary staff

Generally included in FTE calculations if they perform work equivalent to that of employees, though some organisations may track contractor FTE separately for management purposes.

Apprentices and trainees

Usually counted at their actual working hours, which may be less than full-time due to training requirements, but are included in total FTE calculations for most reporting purposes.

Use of FTE calculation in HR

Human Resources departments rely heavily on FTE calculations as a fundamental tool for workforce management, compliance, and strategic planning. This standardised measurement enables HR professionals to make informed decisions about staffing, budgets, and organisational capacity while ensuring compliance with various regulatory requirements.

Workforce planning and capacity management

HR uses FTE calculations to assess current workforce capacity, identify staffing gaps, and plan for future recruitment needs. This includes determining optimal staff-to-workload ratios, planning for seasonal variations, and ensuring adequate coverage across all business functions. FTE analysis helps HR teams understand whether current staffing levels can meet business objectives and where additional resources may be required.

Budgeting and cost management

FTE provides a standardised basis for calculating labour costs, including salaries, benefits, superannuation, and other employment-related expenses. HR departments use FTE calculations to develop annual budgets, compare costs between departments, and analyse the financial impact of different staffing scenarios. This enables more accurate forecasting of personnel expenses and helps justify staffing requests to senior management.

Leave entitlements and accruals

FTE calculations are essential for determining pro-rata leave entitlements for part-time employees. Annual leave, personal leave, and long service leave accrue based on an employee’s FTE status, with part-time employees receiving proportional entitlements. HR systems use FTE ratios to automatically calculate correct leave accruals and ensure compliance with the National Employment Standards.

Performance measurement and benchmarking

HR departments use FTE metrics to measure workforce efficiency, calculate employee-to-revenue ratios, and benchmark against industry standards. This includes analysing productivity per FTE, determining optimal FTE levels for different business functions, and measuring the impact of workforce changes on organisational performance.

Compliance reporting and auditing

Many regulatory requirements and government reporting obligations are based on FTE calculations. This includes workplace safety reporting, equal opportunity data collection, and various statistical surveys required by government agencies. HR ensures accurate FTE reporting to maintain compliance and avoid potential penalties.

Resource allocation and department planning

FTE calculations help HR allocate resources fairly across different departments and business units. This includes distributing shared services costs, determining training budgets, and ensuring equitable access to HR support based on each area’s FTE allocation.

Change management and restructuring

During organisational changes, mergers, or restructuring activities, HR uses FTE analysis to understand the impact on workforce capacity, identify redundancies or gaps, and plan for smooth transitions. FTE calculations help quantify the workforce implications of strategic decisions.

Employee benefits administration

Many employee benefits, insurance premiums, and shared facility costs are calculated based on FTE numbers. HR uses these calculations to determine per-employee costs, negotiate group insurance rates, and allocate facility-related expenses across the workforce.

Technology and systems planning

HR technology implementations, including payroll systems, learning management platforms, and HR information systems, often use FTE-based pricing models. Accurate FTE calculations ensure appropriate system sizing and budget allocation for technology investments.

Australian regulatory and compliance for FTE

FTE calculations in Australia must align with comprehensive employment law and regulatory requirements that govern working hours, entitlements, and reporting obligations across multiple jurisdictions and government agencies.

• Fair Work Ombudsman: Administers the Fair Work Act 2009, which defines ordinary hours of work and standard employment conditions that form the basis for FTE calculations. The Act establishes 38 hours per week as ordinary hours for most employees not covered by awards or agreements that specify different arrangements.
• Australian Securities and Investments Commission (ASIC): Large proprietary companies and public companies must include employee-related information in annual financial reports. FTE data may be required for corporate governance reporting and disclosure of key performance indicators related to workforce management. 
• National Employment Standards (NES): Provides minimum entitlements for annual leave (4 weeks for full-time employees, pro-rata for part-time), personal/carer’s leave (10 days full-time, pro-rata for part-time), and other entitlements calculated based on FTE status. Part-time employees receive proportional entitlements based on their FTE ratio.

Technology and automation

HRIS integration

Modern Human Resource Information Systems automatically calculate FTE based on employee records, working hours, and leave data, ensuring consistent and accurate calculations across the organisation.

Payroll system coordination

FTE calculations integrate with payroll systems to ensure accurate calculation of pro-rata entitlements, superannuation contributions, and other employment-related obligations.

Reporting automation

Automated reporting systems can generate FTE reports for different purposes, including compliance reporting, budget planning, and management reporting, reducing manual calculation errors and improving efficiency.

Best practices for FTE management

Consistent definitions

Establish clear, organisation-wide definitions of full-time hours and ensure consistent application across all departments and reporting requirements.

Regular monitoring

Implement regular review processes to ensure FTE calculations remain accurate and reflect actual working arrangements, particularly for variable hour employees.

Documentation and audit trails

Maintain detailed records of FTE calculations, methodologies, and any adjustments to support compliance audits and regulatory requirements.

System integration

Ensure FTE calculations are integrated across HR, payroll, and financial systems to maintain consistency and reduce discrepancies between different reports.

Training and communication

Provide training for HR staff and managers on proper FTE calculation methods and the importance of accurate data entry for employee hours and arrangements.