Employee turnover rate: what it means and how to calculate it

Employee turnover rate is the share of your workforce that left during a period. You divide the number of people who left by the average number of people you employed, and multiply by 100. If you employed 20 people on average last year and 5 left, your annual turnover rate was 25%.

That’s the whole idea. The details that matter are which departures you count, what period you use, and how to read the number when your team is small.

The formula

Turnover rate = people who left during the period ÷ average number of employees during the period × 100

This is the same calculation the U.S. Bureau of Labor Statistics (BLS) uses in its monthly Job Openings and Labor Turnover Survey (JOLTS): the separations rate is “computed by dividing the number of separations by employment and multiplying that quotient by 100”.

For the average number of employees, the simplest version is the headcount at the start of the period plus the headcount at the end, divided by two. If your headcount swings during the year, average the monthly headcounts instead.

Count people, not full-time equivalents: a part-time employee who leaves is one departure.

Which departures count

BLS splits departures, which it calls separations, into three kinds:

• Quits: people who left voluntarily. Retirements are not counted here.
• Layoffs and discharges: departures the employer started, including firings for cause, layoffs and positions eliminated.
• Other separations: retirements, transfers to another location, deaths and departures because of disability.

Total turnover counts all three. Most of what you can learn from turnover is in the quit rate, the voluntary share, because quits tell you whether people want to stay. BLS itself says the quits rate “can serve as a measure of workers willingness or ability to leave jobs”.

Two details catch people out:

• Seasonal staff. BLS counts the end of a seasonal job as a separation, whether or not the person is expected back next season. If you hire for a season, your total turnover will look high by design. Track the seasonal roles separately, or look at the quit rate.
• People who leave in their first weeks. They count. A hire who quits after a month is a departure, and often the most useful one to look at, because it points at the hiring process rather than the job (more below).

A worked example

These figures are invented to show the calculation. A business starts the year with 12 employees and ends it with 14. During the year 4 people leave: 3 quit and 1 is let go.

Step	Calculation	Result
Average headcount	(12 + 14) ÷ 2	13
Total turnover rate	4 ÷ 13 × 100	30.8%
Quit rate	3 ÷ 13 × 100	23.1%
Involuntary rate	1 ÷ 13 × 100	7.7%

Monthly and annual rates

BLS publishes monthly rates. A monthly rate multiplied by 12 gives a rough annual rate, which is the figure most small businesses think in.

For 2025, the annual averages across all U.S. nonfarm employers were:

Industry	Total separations, monthly	Quits, monthly	Total, roughly per year
All nonfarm employers	3.3%	2.0%	about 40%
Accommodation and food services	5.5%	4.2%	about 66%
Professional and business services	4.6%	2.3%	about 55%
Construction	4.0%	1.8%	about 48%
Retail trade	3.8%	2.6%	about 46%

The monthly figures are from BLS tables 20 and 22, not seasonally adjusted. The last column is our multiplication, not a BLS figure. These are U.S. figures.

Use them as a sense of scale, not a target. An industry average mixes very different employers and jobs, and some of those separations are the same job turning over several times in a year.

Reading the number when your team is small

With 8 employees, one departure is a 12.5% turnover rate. Two departures in a year is 25%, which looks like a problem in a report and may just be two people moving cities. On a small team the rate jumps around from year to year, and a single year tells you very little.

What helps:

• Look at several years together, or a rolling three-year total.
• Read the reasons, not just the rate. Five departures with the same reason (“the hours”, “the manager”, “it wasn’t the job I was told about”) tell you far more than a percentage.
• Separate quits from everything else, and seasonal roles from permanent ones.

New-hire turnover: the number that points at hiring

New-hire turnover is the share of people hired in a period who left within a set time, usually 90 days or the first year. There is no official definition, so pick a window and keep it. For example: of the 6 people hired last year, 2 left within 90 days, so 90-day new-hire turnover was 33%.

Early departures are where hiring most often shows. A job that differed from the posting, a requirement that turned out to matter and wasn’t checked, or a candidate rushed through to fill a gap can all end within weeks. Our hiring metrics guide has a free calculator that records whether each hire is still in the job at 90 days and six months, which gives you this number without extra work.

Turnover rate and retention rate

Retention rate is the share of people employed at the start of a period who are still employed at the end. It is not simply 100% minus turnover, because turnover counts departures of people hired during the period too, and retention ignores them. In the worked example, 12 people were employed at the start; if 2 of the 4 leavers were among them, retention was 10 ÷ 12, or 83%.

The cost of turnover

You’ll often see turnover priced at a fixed share of salary. Those figures usually come without a method, and the cost varies with the job, how long the seat stays empty and what it takes to fill it. You can estimate your own: the cost of the search to replace the person, from our hiring metrics calculator, plus lost work while the job is empty and the time to get a new person up to speed.

Where SortTheStack fits

Turnover is mostly about the job, pay and management, and software won’t fix those. Where hiring is part of the cause, it usually starts at screening: the requirements weren’t clear, or nobody had time to read applications closely. SortTheStack reads every application against requirements you set and shows the evidence for each one, so the people you interview are the ones who meet them. See how the screening works.

Sources

• U.S. Bureau of Labor Statistics, JOLTS technical note and definitions, accessed 13 October 2026.
• U.S. Bureau of Labor Statistics, JOLTS news release, August 2026, and annual tables 20 and 22, accessed 13 October 2026.