Published: 18th December 2025
For SME owners balancing growth ambitions against operational costs, the headline turnover figure of 16 per cent might seem manageable. But dig deeper and the picture shifts. One in three Australian businesses now experiences turnover above 20 per cent, the highest proportion since records began. Meanwhile, small businesses consistently outperform larger competitors on retention, suggesting size can be an advantage if managed well.
Understanding where your turnover sits against genuine benchmarks matters. It affects your hiring costs, your team stability, and your ability to grow. This analysis draws on the latest data from the Australian HR Institute, the Australian Bureau of Statistics, and Employment Hero to provide a clear picture of what turnover actually looks like across Australian workplaces heading into 2026.
The 12-month average employee turnover rate to late 2024 was 16 per cent across all Australian organisations. This figure has remained stable over the past year, unchanged from prior quarters according to AHRI's Quarterly Australian Work Outlook.
However, the average obscures significant polarisation. Forty-three per cent of organisations report turnover below 10 per cent. At the other end, 34 per cent of organisations report turnover of 20 per cent or higher. This high-turnover bracket has grown steadily from just 20 per cent of organisations in mid-2023, indicating worsening extremes despite the stable average.
For SMEs, this polarisation matters. You are likely either performing well below average or facing a serious retention problem. The middle ground is shrinking.
Small and medium businesses consistently show lower turnover than large organisations. The data reveals a clear pattern where turnover increases with organisation size.
Small organisations employing between 2 and 19 people average 11 per cent annual turnover. Medium organisations with 20 to 199 employees average 15 per cent. Large organisations with 200 or more employees average 21 per cent, nearly double the rate of small businesses.
This pattern likely reflects the closer relationships and culture in smaller teams, where departures are more visible and retention efforts more personal. For SMEs, this is a competitive advantage worth protecting.
Industry matters more than size when predicting turnover risk. Construction leads with an average turnover rate of 21 per cent. Distribution sits at the other end with just 13 per cent.
The proportion of organisations experiencing 20 per cent or higher turnover varies dramatically by sector. In retail and hospitality, 40 per cent of businesses exceed this threshold. Production follows at 39 per cent, and construction at 38 per cent.
This means a hospitality SME running 15 per cent turnover is performing well relative to peers, while a professional services firm at the same rate should be investigating causes.
Job mobility data from the ABS confirms these patterns. Health care and social assistance accounted for 14.1 per cent of all workers who changed employers in the year to February 2025. Accommodation and food services represented 12.2 per cent, and retail trade 10.9 per cent.
The national job mobility rate provides another lens on turnover. In the year to February 2025, 7.7 per cent of employed Australians changed employers. This represents 1.1 million people and marks a slight decrease from 8.0 per cent the previous year.
Younger workers show significantly higher mobility. Workers aged 15 to 24 had a mobility rate of 11.5 per cent, compared to 9.2 per cent for those aged 25 to 44, 4.9 per cent for those aged 45 to 64, and just 1.1 per cent for workers aged 65 and over.
Geographic variation is also notable. The Australian Capital Territory recorded the highest mobility at 11.2 per cent, followed by Queensland at 9.2 per cent and Western Australia at 8.6 per cent. New South Wales had the lowest rate at 6.8 per cent, down 0.8 percentage points from the previous year.
Three quarters of Australian employers now capture exit interview data on why employees leave. The findings point to workload and workplace issues rather than compensation as the primary drivers.
Excessive workload tops the list, cited by 26 per cent of employers as the most frequent reason for employees leaving. This is followed by unattractiveness of the role at 21 per cent, which includes factors like anti-social hours and repetitive tasks.
Conflict or poor workplace relationships accounts for 21 per cent of departures. Too few learning and development opportunities comes in at 19 per cent. Lack of flexible working arrangements and low wages both sit at 18 per cent.
Poor job security and leadership or management quality each account for 17 per cent of exits.
For SMEs, the workload finding is particularly relevant. Smaller teams often mean stretched responsibilities. Conducting quarterly workload audits can help identify pressure points before they drive departures.
The workload finding aligns with broader workforce exhaustion data. Employment Hero's research found that 52 per cent of Australian workers took at least one sick day in the past year despite not being physically unwell.
When asked why, 48 per cent cited feeling mentally or emotionally burnt out. A further 35 per cent said they were overwhelmed and needed a break. This burnout is especially acute for workers aged 18 to 24, who are nearly twice as likely as older generations to cite it as the reason. For SMEs relying on young talent pipelines, this represents a direct retention risk.
This exhaustion shows up in leave patterns too. Forty-three per cent of workers missed out on some of their annual leave. Among workers aged 18 to 24, this figure rises to 55 per cent.
The proportion of people leaving to get a better job or simply wanting a change has declined. ABS data shows this motivation accounted for 25 per cent of departures in the year to February 2025, down from 33 per cent in 2022.
Yet 54 per cent of workers searched for a new job during 2025, and 40 per cent applied for one. This gap suggests workers are dissatisfied but staying because the job market feels difficult rather than because they are genuinely content. Three in five workers say the hiring process has discouraged them from applying for new roles.
This latent dissatisfaction represents turnover waiting to happen when hiring conditions improve. SMEs can mitigate this risk by conducting stay interviews to uncover hidden frustrations before they drive departures.
Each employee departure costs companies at least 50 per cent of that employee's annual salary, according to industry estimates cited by AHRI. For specialist or senior roles, this figure can reach 150 to 200 per cent of salary. These costs include recruitment advertising, agency fees if used, interview time for multiple staff members, reference checking, onboarding and training time, and reduced productivity during the learning period.
But the direct costs are only part of the picture. High turnover creates a compounding problem through skills gaps. According to AHRI data, 16 per cent of employees across Australian organisations are perceived as not fully proficient in their roles.
Statistical analysis reveals a significant correlation between skills gaps and turnover. The Pearson correlation coefficient of 0.500 indicates that organisations with larger skills gaps tend to experience higher turnover rates. This relationship is statistically significant at the 0.01 level.
The mechanism is circular. High turnover means constantly training new staff who are not yet proficient. Staff who are not yet proficient create heavier workloads for experienced colleagues. Heavy workloads drive burnout. Burnout drives further turnover. With 22 per cent of employers citing high turnover itself as a cause of skills gaps, this self-reinforcing loop is difficult to break without deliberate intervention.
The biggest cause of skills gaps is employees not being fully trained or experienced in their roles, cited by 36 per cent of employers. Staff reluctance to develop new skills accounts for 31 per cent, as do evolving business or strategic needs.
Young workers represent both the highest turnover risk and the most important talent pipeline for growing businesses. Workers aged 15 to 24 have a job mobility rate of 11.5 per cent, nearly double the overall rate. Of the 2.4 million people who started their current job in the year to February 2025, 82 per cent were aged under 45 and 40 per cent were aged 15 to 24.
Combined with the burnout data showing younger workers nearly twice as likely to cite exhaustion for sick days and 55 per cent of 18 to 24 year olds not taking their full leave entitlement, the picture is clear. Early-career workers are under particular pressure.
With the declining proportion leaving for better jobs (now 25 per cent compared to 33 per cent in 2022), young workers are increasingly leaving due to dissatisfaction with their current role rather than attraction to external opportunities. For SMEs dependent on young talent, prioritising learning and development opportunities directly addresses both the 11.5 per cent mobility risk and the 19 per cent who cite lack of development as a reason for leaving.
The most frequently used retention measures among Australian employers are increased learning and development opportunities (36 per cent), enhanced flexible working arrangements (36 per cent), and improved support for employee wellbeing (36 per cent).
These three measures directly address the top turnover drivers. Learning and development opportunities counter the 19 per cent who leave due to too few such opportunities. Flexible arrangements address the 18 per cent who leave for that reason. Wellbeing support tackles the workload and burnout issues that top the list of departure reasons.
For resource-limited SMEs, start with low-cost flexible arrangements before scaling to formal learning and development programs. Flexibility costs little to implement but directly addresses workforce preferences.
Australian employers are responding to skills and retention challenges with increased training investment. Fifty-eight per cent of employers say training investment will increase at their organisation over the next 12 months, up significantly from 37 per cent in early 2024.
Twenty-nine per cent report training investment will stay the same, while just 3 per cent expect it to decrease. Ninety-three per cent of organisations now have a dedicated training budget.
The priorities for this investment are technical and practical skills (23 per cent of employers), management and leadership skills (15 per cent), generative AI skills (11 per cent), digital literacy (10 per cent), and interpersonal skills (10 per cent).
For small businesses with 2 to 19 employees, turnover below 11 per cent represents better than average performance. For medium businesses with 20 to 199 employees, the benchmark is below 15 per cent.
However, these should be adjusted for industry. A retail or hospitality business with 15 per cent turnover is performing well relative to peers, while a professional services firm at the same rate would be above average and warrants investigation.
The key warning sign is turnover exceeding 20 per cent, which now affects one in three Australian organisations. At this level, the costs and skills gap impacts become severe enough to threaten business performance.
What is the average employee turnover rate in Australia in 2026?
The average employee turnover rate across Australian organisations is 16 per cent based on the most recent 12-month data. However, there is significant variation, with 43 per cent of organisations below 10 per cent turnover and 34 per cent above 20 per cent.
What is a good turnover rate for a small business in Australia?
Small businesses with 2 to 19 employees average 11 per cent annual turnover, so anything below this represents better than average performance. Turnover below 10 per cent is considered healthy. Turnover above 20 per cent warrants investigation.
Which industries have the highest employee turnover in Australia?
Construction has the highest average turnover at 21 per cent. Looking at organisations with turnover above 20 per cent, retail and hospitality leads at 40 per cent, followed by production at 39 per cent and construction at 38 per cent.
What is the main reason employees leave their jobs in Australia?
Excessive workload is the most frequently cited reason, identified by 26 per cent of employers. This is followed by unattractiveness of the role (21 per cent), conflict or poor workplace relationships (21 per cent), and too few learning and development opportunities (19 per cent).
How much does employee turnover cost Australian businesses?
Each employee departure costs at least 50 per cent of that employee's annual salary. For specialist or senior roles, this can reach 150 to 200 per cent of salary. Costs include recruitment, interviewing, onboarding, training, and reduced productivity.
What is the job mobility rate in Australia?
The job mobility rate was 7.7 per cent in the year to February 2025. This represents 1.1 million people and is slightly down from 8.0 per cent the previous year.
Which age group has the highest turnover in Australia?
Workers aged 15 to 24 have the highest job mobility rate at 11.5 per cent, nearly double the overall average. This declines with age to 9.2 per cent for 25 to 44, 4.9 per cent for 45 to 64, and 1.1 per cent for workers 65 and over.
How does turnover vary by state in Australia?
The Australian Capital Territory has the highest job mobility at 11.2 per cent, followed by Queensland at 9.2 per cent and Western Australia at 8.6 per cent. New South Wales has the lowest rate at 6.8 per cent.
What retention strategies work best for Australian SMEs?
The three most effective retention measures are increased learning and development opportunities, enhanced flexible working arrangements, and improved support for employee wellbeing, each used by 36 per cent of employers.
Is there a link between skills gaps and employee turnover?
Yes. Statistical analysis shows a correlation coefficient of 0.500 between skills gaps and turnover, significant at the 0.01 level. The relationship is cyclical, as high turnover itself causes skills gaps through constant retraining.
What percentage of Australian organisations have high turnover?
Thirty-four per cent of Australian organisations report annual employee turnover of 20 per cent or higher. This has increased from 20 per cent in mid-2023.
How does company size affect employee turnover rates?
Turnover increases with organisation size. Small businesses average 11 per cent, medium businesses 15 per cent, and large organisations 21 per cent.
How can SMEs calculate their turnover rate?
Divide the number of employees who left during the year by your average total headcount, then multiply by 100. For example, if 3 employees left from an average team of 25, your turnover rate is 12 per cent.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.
Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire without the recruitment risk, training time, or full-time salary commitment.
Australian HR Institute, Quarterly Australian Work Outlook March Quarter 2025: https://www.ahri.com.au/wp-content/uploads/AHRI-WorkOutlook-Report-2025-Q1.pdf
Australian Bureau of Statistics, Job Mobility February 2025: https://www.abs.gov.au/statistics/labour/jobs/job-mobility/latest-release
Employment Hero, Employment Uncovered 2025: https://employmenthero.com/blog/employment-uncovered-australian-work-insights-2025
Australian Bureau of Statistics, Labour Force Australia November 2025: https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release
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