What is labour turnover and how is it calculated?

• A. The number of new hires in a period.
• B. The total number of employees in the firm.
• C. The rate of resignations only.
• D. The proportion of staff leaving over a period, calculated as (leavers ÷ average staff) × 100.

Answer: (D)

Labour turnover shows how quickly staff leave a business over a given period, giving a sense of workforce stability and the need for recruitment and training. It is calculated by taking the number of staff who leave (leavers) during the period, dividing by the average number of staff employed in that period, and multiplying by 100 to turn it into a percentage. Using the average staff figure avoids distortions when the workforce size changes during the period.

For example, if 25 staff leave in a year and the average headcount during that year is 250, labour turnover = (25 ÷ 250) × 100 = 10%.

This is why the measure focuses on the proportion of leavers relative to the workforce, rather than simply counting new hires (which measures recruitment), total staff (which is headcount, not turnover), or resignations alone (which ignores other reasons people leave and the size of the team).