2025 Employee Retention Benchmarks by Industry (Canada)

In 2025, employee retention has shifted from a secondary HR metric to a defining measure of organizational strength and business performance across Canada.

As employers adapt to a workplace shaped by hybrid models, wage pressures, and fierce competition for skilled talent, retention is no longer a “nice-to-have” — it’s a strategic necessity.

This article takes a closer look at the latest retention benchmarks across key Canadian industries, using data from trusted sources including Mercer Canada, the Human Resources Professionals Association (HRPA), the Conference Board of Canada, and Statistics Canada.

Our aim is to help Canadian business leaders and HR professionals understand how their organizations compare, what’s driving today’s workforce trends, and which strategies can make a lasting impact on keeping great people.

What Is Employee Retention?

At its core, employee retention is an organization’s ability to keep people from leaving — whether through voluntary resignations or other forms of turnover. It’s a direct reflection of the employee experience and one of the clearest indicators of organizational health. Strong retention doesn’t happen by chance; it’s the result of consistent effort to build a supportive, engaging workplace where employees can grow and succeed.

Organizations with high retention rates tend to get the fundamentals right: a positive culture, fair pay, strong leadership, and clear career development opportunities. They recognize that people are their greatest advantage — and they invest accordingly. On the other hand, high turnover often reveals deeper challenges like burnout, poor communication, or a lack of growth prospects.

In 2025, the meaning of retention has evolved. The rise of hybrid and flexible work has changed what employees expect from their employers. Today, a company’s ability to adapt to those expectations is just as critical to retention as salary or benefits.

Understanding Employee Retention and Turnover

While often used interchangeably, employee retention and employee turnover represent two sides of the same coin, each providing a unique lens through which to evaluate organizational stability and effectiveness. Retention measures the percentage of employees who remain with the organization over a given period, while turnover measures the percentage who leave.

• Employee Retention focuses on the loyal talent that an organization successfully keeps. It is a positive indicator of employee satisfaction and engagement.
• Employee Turnover focuses on the talent that is lost. It can be further broken down into voluntary turnover (employees choosing to leave) and involuntary turnover (employees being terminated).

Both metrics are vital for diagnosing the health of a company’s culture and the quality of its leadership. A high retention rate suggests that leadership is effective, the workplace culture is healthy, and employees feel valued. Conversely, a high turnover rate can be an early warning sign of underlying problems that need immediate attention.

To measure retention accurately, organizations use a simple formula:

Retention Rate (%) = (Number of Employees who Remained During Period ÷ Number of Employees at Start of Period) × 100

For example, if a company starts the year with 200 employees and 180 are still employed at the end of the year, its annual retention rate is 90%. Regularly measuring and benchmarking these rates against industry standards allows organizations to identify potential issues before they escalate, turning reactive problem-solving into proactive talent management.

Canada’s Overall Retention Landscape in 2025

The Canadian labour market presents a complex and varied picture when it comes to employee retention. While the national voluntary turnover rate provides a useful baseline, a deeper dive into industry-specific data reveals significant disparities. Benchmarking against these figures is the first step for any organization looking to understand its competitive standing in the war for talent.

Based on an aggregation of data from leading Canadian workforce analysts, the 2025 landscape shows clear winners and losers in the retention battle:

• National Average: The national voluntary turnover rate averages 10.2%, but this figure masks extreme variations between sectors.
• Highest Turnover Industries: The Retail and Wholesale sector continues to struggle significantly, with an average turnover rate of approximately 21%. The Grocery subsector faces an even more acute challenge, with some estimates placing turnover as high as 30%. These high rates are often attributed to demanding work conditions, relatively lower pay scales, and limited opportunities for career advancement.
• Lowest Turnover Industries: At the other end of the spectrum, the Chemical industry demonstrates remarkable stability with one of the lowest turnover rates at 6.5%. This is often linked to high-skilled roles, significant investment in safety and training, and robust compensation packages.
• Healthcare Stability and Strain: The Healthcare sector, particularly in specialized fields like nursing, shows moderate stability with a turnover rate of 6.4%. However, this number belies the persistent and growing risk of burnout, which remains a critical concern for retention in this demanding industry.

The financial implications of this landscape are staggering. According to a recent poll, employee turnover costs Canadian companies an average of $29,234 annually in direct rehiring expenses and lost productivity. Furthermore, the cost of losing highly skilled or senior talent can be exponentially higher, with some estimates suggesting it can cost up to 200% of an employee’s annual salary. Compounding this issue, approximately one-third of Canadian employers expect turnover to increase in the coming year, underscoring the urgency of developing effective retention strategies.

What the Numbers Reveal About Employee Retention in Canada

The 2025 benchmarks for employee retention in Canada tell a story of a workforce in transition. Analyzing these numbers beyond the surface level provides critical insights for business leaders aiming to build resilient and engaged teams.

• A Stable Average with Underlying Risks: While the national average turnover rate appears relatively stable, other indicators suggest potential volatility ahead. A significant factor is the declining level of employee engagement. According to recent data from ADP, only 18% of Canadian employees report being fully engaged at work, a three-point drop from the previous year. This disengagement is a leading indicator of future turnover, suggesting that many organizations are sitting on a retention precipice.
• Retail and Grocery Face Structural Challenges: The retail and grocery sectors are consistently the hardest hit by high turnover. This is not merely a reflection of a transient workforce but points to fundamental structural issues within the industry, including intense scheduling demands, high-pressure customer-facing roles, and wage compression. Improving retention in this industry requires a fundamental rethinking of the employee value proposition.
• Energy and Chemical Industries Model Stability: The low turnover rates in sectors like energy and chemicals offer valuable lessons. These industries often feature strong, safety-oriented company cultures, significant investment in employee development and certification, and highly competitive compensation and benefits structures. They demonstrate that a long-term investment in talent yields powerful retention outcomes.
• Healthcare’s Resiliency is Tested by Burnout: The healthcare sector’s relatively stable retention numbers are a testament to the dedication of its professionals. However, this stability is fragile. The persistent threat of burnout, exacerbated by systemic pressures, means that healthcare organizations cannot afford to be complacent. Proactive investment in mental health support and workload management is essential to prevent a future exodus of critical talent.
• The Clear Financial Imperative: The data underscores a simple truth: even marginal improvements in employee retention can deliver substantial financial savings. By avoiding the direct costs of recruitment and the indirect costs of lost productivity and knowledge, companies that prioritize retention gain a significant competitive advantage.

Key Takeaways

For leaders and HR professionals navigating the Canadian talent landscape in 2025, the data on employee retention offers several clear and actionable conclusions. Understanding these core findings is essential for developing a strategic response.

• Turnover Varies Dramatically by Industry: A one-size-fits-all approach to retention is ineffective. The challenges faced by a retail company are fundamentally different from those in the tech or healthcare sectors. Effective strategies must be tailored to the specific pressures and expectations of your industry.
• One in Three Employers Expect More Turnover: The sentiment among Canadian businesses is one of caution. A significant portion of employers anticipate that retaining talent will become even more difficult. This proactive concern should translate into immediate action to bolster retention efforts before turnover rates climb.
• Healthcare Remains Resilient but at Risk: While the healthcare industry currently maintains a stable workforce, the underlying pressures of burnout and stress cannot be ignored. This sector serves as a critical reminder that retention is not just about preventing employees from leaving for other jobs, but also about preventing them from leaving the workforce altogether due to exhaustion.
• Reducing Employee Churn Saves Real Money: The financial case for investing in employee retention is undeniable. Every employee who stays represents thousands of dollars saved in recruitment, hiring, and training costs, not to mention the preservation of institutional knowledge and productivity.
• Flexibility and Internal Growth Drive Loyalty: Across all industries, two key themes emerge as powerful drivers of employee loyalty. First, the expectation for flexible work arrangements is now a baseline for many professionals. Second, the opportunity for visible career progression and internal mobility is a primary reason top talent chooses to stay and grow with an organization.

Key Trends Shaping Employee Retention in 2025

The retention benchmarks of 2025 are not occurring in a vacuum. They are the result of several powerful trends reshaping the relationship between employees and employers in Canada. Understanding these underlying drivers is crucial for developing strategies that are not just reactive, but forward-looking.

1. The Rise of Hybrid and Remote Work as a Baseline Expectation: The pandemic-era experiment with remote work has permanently altered workforce expectations. For many knowledge workers, flexibility is no longer a perk but a prerequisite. As research from Robert Half confirms, two-thirds of Canadian workers cite flexibility in when and where they work as a top influence on their job satisfaction and decision to stay. Organizations that fail to offer meaningful flexibility will find themselves at a significant disadvantage in attracting and retaining talent.
2. Ongoing Wage Pressure and the Push for Pay Transparency: With inflation and the rising cost of living, compensation has returned to the forefront of the retention conversation. Employees are more attuned than ever to their market value. Concurrently, a growing movement towards pay transparency is empowering workers with more information, making it imperative for companies to ensure their compensation structures are fair, equitable, and competitive.
3. Burnout and Mental Health as Key Factors in Turnover: The focus on employee well-being continues to intensify. High levels of burnout and mental health challenges are direct drivers of employee turnover. In response, forward-thinking employers are investing heavily in support systems. Data shows a clear trend, with 40% of employers who do not currently offer a wellness spending account planning to add one. This highlights a shift towards a more holistic view of employee care as a retention strategy.
4. Career Mobility as a Retention Lever: The modern employee is focused on growth and skill development. The “climb the ladder” mentality has been replaced by a desire for a “jungle gym” of experiences. Organizations that provide clear and accessible pathways for internal career mobility—including lateral moves, special projects, and upskilling opportunities—are far more likely to retain their ambitious talent.
5. The Enduring Impact of Leadership and Recognition: Ultimately, employees leave managers, not companies. The quality of leadership remains one of the most significant factors influencing the employee experience. Effective leaders who provide regular feedback, show appreciation, and foster a psychologically safe environment are a company’s best defense against turnover. A well-designed recognition program is a powerful tool that reinforces this, making employees feel seen and valued for their contributions.
6. Automation and AI Reshaping Job Expectations: The integration of AI and automation into the workplace is changing not only how work gets done but also what employees expect from their jobs. There is a growing demand for roles that involve strategic thinking, creativity, and complex problem-solving—skills that AI cannot easily replicate. Employers who invest in upskilling their workforce for this new reality will foster greater loyalty and engagement.

How to Improve Employee Retention in 2025 (Canada)

Knowing the benchmarks and understanding the trends are only the first steps. The real challenge lies in translating that knowledge into effective, actionable strategies to improve employee retention. Here are six key areas Canadian organizations should focus on in 2025.

1. Offer Meaningful Flexibility: Go beyond vague promises and formalize your hybrid and remote work policies. Clearly define expectations around in-office time, core collaboration hours, and asynchronous work. Providing employees with autonomy and trust over their schedules is a powerful, low-cost way to enhance employee satisfaction and retention.
2. Stay Competitive on Compensation and Benefits: Regularly conduct market analysis and use industry benchmarks to ensure your pay scales are competitive. However, compensation is more than just salary. As rising benefit costs become the top issue influencing employers’ strategies, it is crucial to offer a comprehensive package that meets modern employee needs, including robust health, mental health, and wellness benefits.
3. Invest in Visible Career Development: Don’t let career paths be a mystery. Create transparent frameworks for promotion and skill development. Invest in learning and development programs, mentorship opportunities, and internal mobility platforms. When employees can see a future for themselves within the organization, they are far less likely to look for one elsewhere.
4. Train Leaders and Recognize People: Your frontline managers have the single biggest impact on your workplace culture and retention rates. Invest in leadership training that focuses on modern management skills: coaching, providing constructive feedback, fostering psychological safety, and recognizing contributions effectively. Implement a structured recognition program that celebrates both large and small achievements, reinforcing desired behaviours and making employees feel valued.
5. Prioritize Employee Well-being: Actively work to create a culture that prevents burnout, rather than just reacting to it. This involves encouraging healthy work-life boundaries, managing workloads realistically, and providing accessible mental health resources. Leadership must model these behaviours to show that the organization is genuinely committed to its employees’ well-being.
6. Leverage HR Analytics and Feedback: Use data to make informed decisions. Track your turnover rates and segment the data by department, manager, and role to identify hotspots. Crucially, leverage the insights from exit interviews. This feedback from departing employees is an invaluable source of truth about what needs to be fixed in your organization. Understanding why people leave is the key to convincing others to stay.

Conclusion: Retention as a Competitive Advantage

In Canada’s 2025 talent market, employee retention has become a clear differentiator between companies that thrive and those that struggle to keep up. The ability to attract, engage, and retain top talent is no longer just an HR priority — it’s a core business strategy that drives productivity, innovation, and long-term growth.

Improving retention starts with knowing where you stand. Industry benchmarks provide the context you need to measure performance, spot gaps, and focus your efforts where they’ll have the most impact. But data alone won’t change outcomes — the real advantage comes from turning insight into action: developing strong leaders, nurturing a positive culture, rewarding contribution, and building an employee experience people don’t want to leave.

When retention becomes part of your company’s DNA, it stops being a problem to fix and becomes a competitive edge. Organizations that benchmark consistently, act on their findings, and measure results over time will build more engaged, loyal, and resilient teams — the kind of teams that outperform even in a challenging labour market.