Labour Turnover PDF

we will discuss about:- 1.
Definition of Labour Turnover

2 . Causes of labour Turnover 3. Effects of Labour
Turnover 4. Measurement of Labour Turnover 5. Labour
Turnover Report.
Contents:
1. Definition of Labour Turnover
2. Causes of labour Turnover
3. Effects of Labour Turnover
4. Measurement of Labour Turnover
5. Labour Turnover Report
1. Definition of Labour Turnover:

Labour turnover refers to the rate at which employees leave
employment. Labour turnover can be evaluated by relating the
number of employees leaving their employment during a period of
time to the total or average numbers employed in that period.
It may also be defined as engagements and losses in the working

force as related to the total number of employees who were on the
pay roll at the beginning of the period in question.
Example:
Let us assume that in a factory there were 2,000 employees on an
average during the year 1990 and 100 persons left the company
during this period. So, the labour turnover will be 100/2000 =
5%
Generally, it is measured by the following formula:
2. Causes of labour Turnover:

Avoidable causes are:
(i) Lower wages;
(ii) Bad working condition
(iii) Unsympathetic attitude of the management;
(iv) Lack of opportunities for promotion;
(v) Lack of proper training;
(vi) Improper manpower planning;
(vii) Lack of proper incentives;
(viii) Bitter relationship between management and workers;
(ix) Lack of conveyance, accommodation, medical and educational

facilities and recreational amenities etc.
Unavoidable causes:
Sometimes workers have to leave the organisation because of
management requirements and administrative actions. They also
leave their employment at their own will, that is, on personal
reasons. In the latter case the management can do nothing but
remains a helpless onlooker. So, unavoidable causes may be
administrative or personal.
(1) Administrative causes:

(i) Termination of service due to indiscipline, insubordination,
bad conduct etc.
(ii) Retrenchment or lay-off due to shortage of resources, low

demand for recession.
(2) Personal causes:

(i) Change for better job;
(ii) Death;
(iii) Retirement due to old age;
(iv) Change for better working conditions, better environment;
(v) Change for secured job;
(vi) Marriage, especially of women workers;
(vii) Illness and accident rendering the worker permanently

incapable of doing any work;
(viii) Domestic need and responsibility etc.
3. Effects of Labour Turnover:

Labour turnover is harmful and costly. It results in
increased cost of production due to the following
reasons:
(i) With frequent changes in labour force, production planning
cannot be properly executed resulting in substantial loss in
production.
(ii) Since the new workers have no previous experience in

production there is loss arising out of defective work, increased
spoilage and wastage resulting in high cost of production.
(iii) Newly recruited workers are likely to mishandle tools and

equipment which results in breakages.
(iv) The organisation has to incur extra cost for workers’ training.
(v) Labour turnover causes increased replacement cost.
(vi) Labour cost increases because of lower productivity of newly

recruited workers as they do not possess the same expertise as the
old workers who have left the organisation.
4. Measurement of Labour Turnover:
Labour turnover rate can be measured by the
application of any one of the following three methods:
(i) Separation method:
(ii) Replacement method:
(iii) Flux method:
Problem 1:
From the following data given by the Personnel
Department calculate the labour turnover rate by the
application of above three methods:
No. of workers on the Pay Roll:
At the beginning of the month Jan, 91 900
At the end of the month 1,100
During the month 10 workers left, 40 persons were discharged

and 150 workers were recruited. Of these, 25 workers were
recruited in the vacancies of those leaving, while the rest were
engaged for an expansion scheme.
Treatment in Cost Accounts:
Preventive costs are allocated to different departments in
proportion to the respective labour force.
Replacement costs are, however, charged directly to the

department where such replacement takes place. But, when the
replacement does take place because of general management
policy but not due to the fault of the department concerned, in
such a case, it is desirable to treat such costs as overhead and
should be apportioned and allocated to all the departments on the
basis of number of workers on the pay roll.
If, however, labour turnover costs cannot be classified or

identified as preventive or replacement costs, they are usually
treated as overhead expenses and should not be charged direct to
any job order.

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we will discuss about:- 1.

Definition of Labour Turnover

1. Definition of Labour Turnover:

It may also be defined as engagements and losses in the working

Generally, it is measured by the following formula:

2. Causes of labour Turnover:

(ii) Bad working condition

(iii) Unsympathetic attitude of the management;

(iv) Lack of opportunities for promotion;

(v) Lack of proper training;

(vi) Improper manpower planning;

(vii) Lack of proper incentives;

(viii) Bitter relationship between management and workers;

(ix) Lack of conveyance, accommodation, medical and educational

(1) Administrative causes:

(ii) Retrenchment or lay-off due to shortage of resources, low

(2) Personal causes:

(iv) Change for better working conditions, better environment;

(v) Change for secured job;

(vi) Marriage, especially of women workers;

(vii) Illness and accident rendering the worker permanently

(viii) Domestic need and responsibility etc.

3. Effects of Labour Turnover:

(ii) Since the new workers have no previous experience in

(iii) Newly recruited workers are likely to mishandle tools and

(v) Labour turnover causes increased replacement cost.

(vi) Labour cost increases because of lower productivity of newly

(ii) Replacement method:

(iii) Flux method:

At the end of the month 1,100

During the month 10 workers left, 40 persons were discharged

Replacement costs are, however, charged directly to the

If, however, labour turnover costs cannot be classified or

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