Labour Turnover, a Practical Hint

Labour Turnover, A Practical Hint

In theory labour turnover is a very simple thing to calculate. As you should be aware a as a % of b is (a/b) x 100. So to apply that to labour turnover the rate is calculated as (number of employees leaving/number of employees employed) x 100. Now what could be simpler than that?

There are two points which can cause confusion. They both relate to whom to include. For example many industries rely on a large number of temporary workers to deal with seasonal peaks. A restaurant might be a suitable example. They do a huge amount of business in December because people are out at Christmas parties. For this purpose they recruit casual short term staff for a few weeks. If my restaurant normally employs 10 people and if 1 person leaves in the year I hope you can see that I have a labour turnover of 10%. Yet if I employ 20 extras for December is it really sensible to say that my turnover has gone up to 21/30 = 70%? I think not.

The other one is where an employer uses zero hours contracts. If somebody is on a zero hours contract he or she is not necessarily offered any work in any period. Also if offered he or she is not obliged to work the hours. These contracts work for some people although I don’t think I would ever find them appealing. So how do you work out how many people are actually employed, or for that matter when someone has left? The simple answer is, well, I don’t know either! There is no need to go into more detail but I think you can see the potential pitfalls.