Here is how to calculate employee turnover rate: divide the number of employees who left during a period by the average number of employees in that period. Then multiply by 100. If 6 people left in a month and you averaged 120 employees, your monthly turnover rate is 5%. The same formula works for a quarter or a year; only the period changes.
This guide shows how to calculate employee turnover rate step by step, with worked examples for monthly and annual rates, voluntary and involuntary turnover, and the related retention rate.
The Turnover Rate Formula
The standard formula for how to calculate employee turnover rate is:
Turnover rate (%) = (Number of separations ÷ Average number of employees) × 100
Average number of employees is usually the headcount at the start of the period plus the headcount at the end, divided by two. Employers with big swings in headcount sometimes average the headcount at several points in the period instead, which gives a steadier figure.
What counts as a separation?
The U.S. Bureau of Labor Statistics’ JOLTS definitions describe separations as all employees separated from the payroll during the month, grouped into three types:
- Quits: employees who left voluntarily.
- Layoffs and discharges: involuntary separations initiated by the employer, including layoffs and firings for cause.
- Other separations: retirements, transfers to other locations, deaths and separations due to disability.
BLS also excludes workers supplied by temporary help agencies, employee leasing companies and outside contractors from an employer’s own count, because those workers are on the staffing firm’s payroll. Following the same logic keeps your internal numbers consistent: count your own employees, and track contract workers separately.
How to Calculate Employee Turnover Rate: Step by Step
- Pick the period. Month, quarter or year. Use the same period every time you compare.
- Count headcount at the start. Employees on payroll on the first day of the period.
- Count headcount at the end. Employees on payroll on the last day.
- Calculate the average. (Start + End) ÷ 2.
- Count separations. Every employee who left during the period, voluntary or not.
- Divide and multiply. Separations ÷ average headcount × 100.
Example 1: Monthly turnover rate
A company starts March with 118 employees and ends with 122. Seven people left during the month.
- Average headcount = (118 + 122) ÷ 2 = 120
- Turnover rate = 7 ÷ 120 × 100 = 5.8%
Example 2: Annual turnover rate
For a full year, how to calculate employee turnover rate stays simple: use separations for the whole year and average headcount for the year. Suppose a company averaged 200 employees across the year and had 38 separations.
- Annual turnover rate = 38 ÷ 200 × 100 = 19%
You can also estimate how to calculate employee turnover rate per year by adding up the 12 monthly rates. This gives a close figure when headcount is stable, but the direct annual method is more accurate when headcount changes a lot.
How BLS calculates annual rates
If you want your figures to line up with federal labor turnover data, follow the method in the BLS JOLTS Handbook of Methods. For annual average separation rates, BLS divides the sum of the 12 monthly separation counts by the sum of the 12 monthly employment levels, then multiplies by 100. In practice, that is the same as dividing total separations for the year by average monthly employment. Using monthly headcounts rather than just the start and end of the year gives a fairer average when hiring is uneven.
Example 4: Turnover in a small team
Small teams see big swings from one departure. A 15-person firm with an average headcount of 15 and 3 separations in a year has an annual turnover rate of 3 ÷ 15 × 100 = 20%. That figure is accurate, but each exit moves it by more than 6 points, so look at several years and the reasons behind each exit before drawing conclusions.
Voluntary vs Involuntary Turnover
One overall figure hides very different stories. Knowing how to calculate employee turnover rate by type tells you what to fix.
| Measure | Formula | What it tells you |
|---|---|---|
| Overall turnover rate | All separations ÷ average headcount × 100 | How much of the workforce changed |
| Voluntary turnover rate | Quits ÷ average headcount × 100 | Pay, management, growth or culture issues |
| Involuntary turnover rate | Layoffs and discharges ÷ average headcount × 100 | Hiring fit, performance or restructuring |
| First-year turnover | Leavers with under 12 months’ service ÷ hires in the period × 100 | Quality of hiring and onboarding |
| Retention rate | Employees still employed at the end who were there at the start ÷ starting headcount × 100 | Stability of your existing team |
Example 3: Splitting the annual figure
Using the 38 annual separations above: 26 were quits, 9 were layoffs or discharges and 3 were retirements.
- Voluntary turnover = 26 ÷ 200 × 100 = 13%
- Involuntary turnover = 9 ÷ 200 × 100 = 4.5%
- Other separations = 3 ÷ 200 × 100 = 1.5%
This company’s main issue is voluntary exits, so pay, managers and career paths deserve a closer look before hiring practices.
How to Calculate Employee Retention Rate
Retention rate is not simply 100% minus turnover, because turnover counts people who were hired and left within the same period. To calculate employee retention rate:
Retention rate (%) = (Employees at the start who are still employed at the end ÷ Employees at the start) × 100
If 150 people were on payroll on January 1 and 129 of them were still there on December 31, retention is 129 ÷ 150 × 100 = 86%. New hires during the year are left out of this calculation on purpose.
Common Mistakes When Measuring Turnover
- Mixing periods. Comparing a monthly rate with an annual rate makes the month look small.
- Counting contractors. Ending a contract assignment is not an employee separation; track contingent workers in a separate report.
- Ignoring internal moves. Transfers within the same location are not separations.
- Using one number for everyone. Break turnover down by department, manager, role and tenure.
- No context. Seasonal businesses should compare the same months year over year.
Turning the Number Into Action
Knowing how to calculate employee turnover rate only helps if the number leads to decisions. Pair the number with exit interview themes, tenure data and the cost of refilling roles. Then pick a few focused actions, such as better onboarding, clearer career paths or manager training. Our guide to employee retention strategies covers practical options, and workforce planning helps you budget for the turnover you expect.
High first-year turnover often points to how roles are described and filled. Reviewing your 90-day review process is a good place to catch problems early.
How to Calculate Employee Turnover Rate FAQ
What is the formula for employee turnover rate?
To recap how to calculate employee turnover rate: divide the number of separations in a period by the average number of employees in that period. Then multiply by 100. Average headcount is usually start plus end headcount divided by two.
What does a 20% turnover rate mean?
It means that, over the period measured, the number of people who left equaled one-fifth of your average workforce. With an average of 100 employees, 20 people left. Whether that is high depends on your industry, roles and history.
Should turnover include employees who are fired?
Overall turnover includes all separations, including discharges. Report involuntary turnover separately so you can tell performance-related exits from people choosing to leave.
How often should I calculate turnover?
Most employers track it monthly and review it quarterly and annually. Monthly tracking spots spikes early, while annual figures are better for planning and comparisons.
Reduce Turnover With Better Hiring
When turnover keeps you hiring for the same roles, the right recruiting partner can help. Bridgecore Partner offers staffing and hiring services for permanent, contract and specialist roles. Contact Bridgecore Partner to talk through the roles you refill most often.