Employee Turnover Rate
Definition, rules and examples

The turnover rate formula

The most widely used version of the formula is:

Turnover rate = (Number of separations during the period ÷ Average number of employees during the period) × 100

Average headcount is commonly calculated as (headcount at the start of the period + headcount at the end) ÷ 2. Larger employers sometimes average monthly headcounts across the year for more precision. Whichever method you pick, use it consistently so you can compare periods.

What counts as a separation

The Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) offers clear category definitions that work well for internal reporting:

• Separations: all employees separated from the payroll during the month.
• Quits: employees who left voluntarily (JOLTS reports retirements and transfers under other separations, not quits).
• Layoffs and discharges: involuntary separations initiated by the employer, including layoffs, firings for cause, and position eliminations.
• Other separations: retirements, transfers to other locations, deaths, and separations due to employee disability.

Splitting turnover into voluntary (quits) and involuntary (layoffs and discharges) is useful because the causes and fixes are different. High quits point to pay, scheduling, or management issues; high discharges may point to hiring or training gaps.

How it works: worked examples

Monthly example. A hypothetical restaurant group starts March with 48 hourly employees and ends with 52. During March, 4 employees leave.

• Average headcount: (48 + 52) ÷ 2 = 50
• Turnover rate: (4 ÷ 50) × 100 = 8% for March

Annual example with a breakdown. Across the year the same group averages 50 employees and records 30 separations.

Note that summing twelve monthly rates gives a rough annual figure, but calculating the annual rate directly from annual separations and average headcount is cleaner.

Related metrics

• Retention rate: the share of employees present at the start of a period who are still employed at the end. See employee retention.
• Early turnover: separations within the first 90 days, often a sign of onboarding or scheduling problems.
• Cost of turnover: recruiting, onboarding, training time, overtime to cover open shifts, and lost productivity. Estimate it with your own numbers rather than generic benchmarks.

Why turnover matters for hourly teams

When an hourly employee leaves, the open shift does not disappear. Someone covers it, often at overtime rates, or the shift runs short-staffed. A manager also spends time posting the job, interviewing, and training. Watching turnover alongside overtime hours and absenteeism helps you see whether staffing gaps are driving burnout, which then drives more turnover.

Best practices for reducing turnover

• Publish schedules early. Predictable hours let people plan childcare, school, and second jobs.
• Give employees flexibility. Approved shift swaps and easy time-off requests reduce no-shows and quits.
• Pay accurately and on time. Payroll errors damage trust quickly.
• Watch overtime load. Repeatedly asking the same people to cover can push them out.
• Run exit conversations. Record the reason for every separation so you can track patterns.
• Train front-line managers. Day-to-day supervision is a major part of the employee experience.

Common mistakes when measuring turnover

• Using end-of-period headcount instead of an average, which distorts the rate when headcount changes.
• Mixing seasonal workers with permanent staff without labeling them.
• Counting internal transfers as turnover in one month and not the next.
• Comparing your rate to a figure from another industry or a different calculation method.
• Tracking the number without recording why people left.

How to track turnover month by month

A turnover number is only useful if it is calculated the same way every time. A simple monthly routine is enough for most small and mid-sized employers:

1. Record every separation with the employee's last day, role, location, and a reason code.
2. Use consistent reason codes, for example: quit for another job, quit for schedule, quit for pay, quit for personal reasons, discharged for attendance, discharged for performance, laid off, retired, transferred.
3. Capture headcount on the first and last day of the month.
4. Calculate the rate for the whole business and for each location or role.
5. Separate the first 90 days so you can see how many new hires leave early.
6. Review the trend over at least six to twelve months before drawing conclusions.

Small teams should be careful with percentages. If a location has 10 employees, one departure is a 10% monthly turnover rate, which can look alarming but may simply be one person moving away. Look at the raw count alongside the rate.

Pair the turnover report with operational data you already have. If quits rise at one location at the same time as overtime hours, late schedule changes, or absences, those signals point to where to act first. Exit conversations then help confirm whether scheduling, pay, or management is the main driver.

Turning the number into action

Once you have a reliable rate, choose one or two causes to work on rather than everything at once. If most quits cite schedules, focus on posting schedules earlier and approving swaps faster. If early turnover is high, look at onboarding, first-week scheduling, and whether new hires get enough hours. Measure the same way again after three to six months to see whether the change made a difference.

How EZTime helps

EZTime does not calculate turnover for you, but it addresses several everyday causes of it. Managers can build fair schedules with AI shift scheduling and shift templates, let employees request shift swaps with manager approval, and handle time-off requests through PTO and absence management. Overtime alerts show when the same people are carrying too many hours, and attendance records from the GPS mobile time clock, NFC tags, tablet kiosk, or biometric clocks show absence patterns early. Payroll-ready exports go to any payroll software. Start from $2 per employee per month with a 14-day trial; explore scheduling software and pricing.