Your guide to employee turnover and retention

Hiring great people is one of the most powerful ways to grow your business. Keeping them is an entirely different challenge.

Every time a team member walks out the door, it costs your business time, money and momentum. Understanding your employee turnover rate is the first step to stopping the revolving door of talent. When you know why people leave, you can build a workplace that makes them want to stay.

This factsheet breaks down everything you need to know about employee turnover, covering:

• What employee turnover is and the two types (voluntary vs involuntary)
• How to calculate your turnover rate
• What’s considered a normal rate in Australia
• The real cost of replacing an employee

What is employee turnover?

Employee turnover refers to the number of people who leave your organisation during a specific period. It includes everyone who resigns, retires, faces termination or gets laid off.

High turnover usually points to deeper issues within your business. It might signal poor management, a toxic culture or uncompetitive pay. Measuring this metric gives you a clear picture of your workplace health.

When looking at turnover, you need to understand the two main categories.

Voluntary turnover

Involuntary turnover

Voluntary turnover happens when an employee actively chooses to leave your company. They might find a better opportunity elsewhere, decide to change careers or step back for personal reasons. This type of turnover is the most disruptive. You lose valuable knowledge, experience and often your top performers. High voluntary turnover is a big red flag for employers. It means your employee experience needs immediate attention.

Involuntary turnover occurs when you ask an employee to leave. This includes terminations for poor performance, behavioural issues or company layoffs. While involuntary turnover is sometimes necessary to protect your company culture and bottom line, too much of it can indicate flaws in your hiring process. If you constantly fire underperforming staff, you need to look at how you hire.

Who is responsible for employee turnover?

Many businesses assume turnover is purely an HR problem, which is a mistake. Accountability for employee retention sits across your entire leadership team. Business owners and founders set the vision and culture. If the company lacks direction, employees will look for it elsewhere.

Direct managers have the biggest impact on the day-to-day employee experience. People leave bad managers, not bad companies. If your leaders lack empathy or communication skills, your team will suffer.

HR professionals provide the tools, data and frameworks to support retention. They highlight trends, manage compliance and implement engagement strategies. They are the architects of your culture, but your managers must build it.

Everyone in a leadership position shares the responsibility of keeping your best people.

What is an employee turnover rate and why does it matter?

Your employee turnover rate is the percentage of your workforce that leaves over a set period. Tracking this data is critical for scaling businesses.

Losing staff is expensive, accounting for recruitment costs, lost productivity and the time it takes to train a replacement. If your business has 50 employees and a high turnover rate, you are bleeding thousands of dollars every year.

Turnover also impacts team morale. When people see their colleagues leaving, they start questioning their own future at the company. It increases the workload for the remaining staff, which leads to burnout and even more resignations.

Understanding your data gives you the power to change course. By tracking your employee turnover, you can identify problems early and intervene before it damages your bottom line.

What is a healthy employee turnover rate?

Zero turnover is not the goal. Some turnover is healthy and necessary for a growing business. It brings fresh ideas, new skills and renewed energy into your team.

Resource shows that the average turnover is roughly 16% across all Australian organisations, slightly higher than the commonly cited 10–15% benchmark, reflecting ongoing workforce pressures. 

Comparing your rate against industry benchmarks tells you where you stand. The goal is to keep your voluntary turnover low while managing involuntary turnover effectively.

Calculating turnover: A step-by-step guide

Calculating your employee turnover rate is straightforward once you have the right numbers.

Step one: Gather your data

Choose the time period you want to measure. In Australia, most businesses calculate turnover annually or quarterly. 

You need three key pieces of data for this including:

1. The number of employees at the start of the period
2. The number at the end
3. The total number who left during that period.

Step two: Calculate the average number of employees

Add the number of employees at the start and end of the period, then divide by two.

Example: (40 employees at the start + 30 at the end) / 2 = 35 average employees.

Step three: Calculate your turnover rate

Divide the number of employees who left by your average headcount, then multiply by 100.

Example: (10 employees left / 35 average employees) x 100 = 28.57% turnover rate.

HR reporting software can automate these calculations. Real-time data takes the guessing out of your retention strategy.

Get your turnover data in record time with Employment Hero

Tracking how many people your business loses over time doesn’t have to be a manual exercise. Employment Hero’s Turnover Report gives admins an instant, visual snapshot of your company’s turnover. 

The report includes a range of charts so you can see your turnover picture at a glance, alongside a detailed table of data for when you need to dig deeper. You can filter the data, analyse trends and export everything to CSV for further review.

The result is less time spent pulling numbers together and more time actually acting on them, which is where the real work of reducing turnover happens.

How to analyse your turnover rate

Knowing your number is only half the battle. You need to dig into the data to understand the story behind it.

Which employees are leaving?

Look at the demographics of your departing staff. Are you losing new hires within their first 90 days? If so, your onboarding process needs a complete overhaul. Are your top performers walking out the door? This suggests a lack of career development or uncompetitive pay.

Why are employees leaving?

Exit interviews are your most valuable tool here. People aren’t just leaving for more money or a better title. Our Recruitment Report found that 53% of Australian employers reported an increase in turnover over the past 12 months and the reasons go deeper than compensation.

Our Employment Uncovered Research found that 52% of Australian workers took at least one sick day in the past year despite not being physically unwell, with 48% citing mental or emotional burnout as the reason. That kind of exhaustion is much more likely to walk out the door.

Onboarding is another factor our research keeps surfacing. One in four Australian new starters rated their onboarding experience as poor. If you’re losing people before they’ve even found their feet, the problem starts on day one.

Are there any patterns?

Look for trends across departments or specific managers. If one team has a 40% turnover rate while the rest of the business sits at 10%, chances are you have a management problem. Track turnover by role, location and tenure. Identifying these patterns allows you to target your retention efforts exactly where they are needed.

Common reasons for a high turnover rate

Lack of recognition

If your team members give their all and never receive a simple “thank you”, they’re going to find an employer who values their effort. Recognition drives motivation and is one of the most cost-effective retention tools available.

Toxic company culture

Poor relationships with managers or colleagues destroy team morale. Gossip, micromanagement and a lack of psychological safety drive good people away quickly. Culture is defined by the worst behavior you tolerate.

Inadequate pay and benefits

Your compensation is not competitive. Pay is a baseline expectation and if a competitor is offering more for the same role, your staff will leave.

No career development

Employees see no future with your company. Ambitious people want to grow and if you’re not providing that opportunity, they’ll find it elsewhere.

Learning and development is one of the most powerful levers employers have when it comes to retention. When employees can see a clear path forward, feel supported in building new skills and believe their employer is genuinely invested in their future, they stay. When they can’t, they start looking.

Career development doesn’t have to mean expensive training programs or constant promotions. Regular career conversations, stretch opportunities, mentorship and promoting from within all send a powerful message: there’s a future here for you.

A poor employee experience

From onboarding to day-to-day work, people feel disconnected. Clunky software, confusing processes and poor communication frustrate your team. A seamless employee experience is essential for retention.

Employee retention strategies for long-term success

Boost employee engagement and satisfaction

Engaged employees care about their work and the success of your business. Give them challenging work, trust them to make decisions and listen to their feedback. Send out regular pulse surveys to check in on team sentiment. Act on the feedback you receive to show you value their input.

Enhance the employee experience

Use technology to automate admin tasks so your team can focus on meaningful work. Simplify onboarding, make requesting leave easy and provide access to the right tools. When work is easy to manage, stress levels are likely to drop.

Offer competitive pay and benefits

Benchmark your salaries against the current market and pay your people what they are worth. If you’re not sure where you stand, Employment Hero’s compensation benchmarking tools can help you understand how your salaries compare against industry peers so you’re not losing talent to a competitor offering a few thousand dollars more.

If you can’t compete on base salary alone, look beyond the pay cheque. Flexibility is one of the most powerful and cost-effective retention levers available to Australian employers. So are benefits. Employment Hero gives your team access to exclusive perks, discounts and wellbeing resources that make a real difference to everyday life; the kind of benefits that were once only available to large enterprises, now accessible to businesses of any size.

Recognise and reward your team

Never underestimate the power of feeling valued. Celebrate wins constantly, both publicly and privately and make recognition a regular part of your culture rather than an afterthought.

Employment Hero’s built-in peer-to-peer recognition tool makes it easy for your team to shout out great work in the moment, building a culture of appreciation that keeps morale high and disengagement at bay. When employees feel genuinely seen and celebrated, they’re far less likely to be scrolling job boards.

Investing in your existing people, through recognition, rewards and real development opportunities, sends the message that there’s a future here for you. That’s one of the most compelling reasons to stay.

Foster open communication

Transparency builds trust. Keep your team informed about company goals, financial performance and upcoming changes. Hold regular one-on-one meetings to discuss roadblocks and career aspirations. When people feel informed, they feel secure.

If you’re looking for more information on reducing turnover, download our Guide to Reducing Staff Turnover.

Ready to take control of your turnover?

High turnover doesn’t fix itself, but with the right tools, HR reporting and support, it’s absolutely solvable.

Our employee turnover factsheet covers everything you need to get started: how to calculate your turnover rate, what’s driving people out the door and the practical steps you can take right now to improve retention across your business.

Whether you’re dealing with a sudden spike in resignations or trying to get ahead of the problem before it starts, this guide gives you a clear framework to act on.

Disclaimer: The information in this guide is current as at 23 April 2026 and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this guide are general information only, are provided in good faith to assist employers and their employees and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this guide. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this guide.