How to Calculate Number of Work Hours in a Year

FTE are calculated based on 2,080 hours per year.
FTE are calculated based on 2,080 hours per year. (Image: Ye Liew/iStock/Getty Images)

When calculating personnel salary budgets and payroll expenses, HR professionals use 2,080 hours per year to represent a full-time employee (FTE). This number includes the total hours a salaried employee will be compensated for throughout the work year. This number is often different from the actual number of hours worked, which is closer to 1,920 depending on company leave and holiday policy.

Calculating Yearly Hours

To calculate the number of hours FTEs are paid for, multiply 40 hours per week by 52 weeks in a year. This gives a total of 2,080 hours your FTE will be compensated for. However, that number will decrease when you subtract the number of federal holidays and the number of vacation days the company allows. Assuming that the company recognizes 10 federal holidays and offers employees 10 paid days of leave, the number of actual work hours is greatly reduced. In this example, we take the total number of work hours (2,080) minus federal holidays (10 days x 8 hours) minus leave days (10 days x 8 hours) for a total of 1,920 hours in the year (2,080-80-80 = 1,920 actual work hours). These numbers may vary if training and additional leave time is offered.

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