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

> What turnover rate means, the standard formula, a worked example for a small team, the official U.S. rates to compare against, and why one departure can make your number look alarming.

David at SortTheStack, October 14, 2026. Original: https://sortthestack.com/blog/employee-turnover-rate

**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](https://www.bls.gov/news.release/jolts.tn.htm)
(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](https://www.bls.gov/news.release/jolts.t20.htm)
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](https://www.bls.gov/news.release/jolts.t20.htm) and
[22](https://www.bls.gov/news.release/jolts.t22.htm), 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](https://sortthestack.com/blog/hiring-metrics) 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](https://sortthestack.com/blog/hiring-metrics), 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](https://sortthestack.com/product).

## Sources

- U.S. Bureau of Labor Statistics,
  [JOLTS technical note](https://www.bls.gov/news.release/jolts.tn.htm) and
  [definitions](https://www.bls.gov/jlt/jltdef.htm), accessed 13 October 2026.
- U.S. Bureau of Labor Statistics,
  [JOLTS news release, August 2026](https://www.bls.gov/news.release/jolts.nr0.htm),
  and annual tables [20](https://www.bls.gov/news.release/jolts.t20.htm) and
  [22](https://www.bls.gov/news.release/jolts.t22.htm), accessed 13 October 2026.