Getting laid off vs. fired: what are the key differences?

No matter your situation, losing a job can easily be one of the most stressful life events you’ll ever face.

The prospect of losing a steady paycheck and health insurance can be terrifying and depressing. These feelings are the same regardless of how you lost your job.

But to plan for the future, it’s important to understand the reasons for the job loss. Getting laid off is different from getting fired and has different implications for benefits and future job prospects.

In this article, we’ll break down the differences between getting laid off vs. getting fired and outline the steps you can take to successfully move on from this setback.

What does it mean to be laid off?

If you’ve been laid off, you may be wondering how and why this happened. You might be asking yourself if you did something wrong.

The more important question to ask is, were you laid off? Or were you fired?

The difference might seem trivial, but in reality, it’s pretty crucial to determine which circumstance you’re facing.

The key difference between a layoff and a firing has to do with fault.

In a layoff, the employer is the driving reason — it’s not personal.

On the other hand, a firing is the fault of the employee, usually the result of poor performance. Repeatedly showing up late, calling out too often, or mishandling resources are common reasons for firing an employee.

The most common reasons that a company might lay off (or furlough) a worker are:

• To reduce costs (downsizing)
• To eliminate employee roles that are no longer needed
• To relocate to a different geographical area (I.e., move their manufacturing overseas)
• A merger with another company or a buyout of a business that results in having more people than needed doing the same work

If the reason for your termination is unclear, it’s really important to clarify.

The knowledge that you have been laid off or fired makes a huge difference in how you will approach your future job search. It can also affect your entitlement to a compensation package, workers’ compensation, or your unemployment benefits.

When it comes to unemployment benefits, every state is different.

In most states, you are eligible if your earnings meet minimum requirements, you were terminated for no fault of your own, and you are actively seeking employment.

Additional restrictions (such as the minimum earning threshold and any coronavirus provisions) differ from state to state.

Though you might feel crushed by your job termination, it’s important to keep in mind that you’re not alone.

In April of 2020 alone (during the height of the coronavirus pandemic) a total of 16.8 million people were laid off. Although many of these layoffs were initially intended to be temporary, a number of furloughed employees have since joined the ranks of the permanently unemployed.

If you are in any of the industries listed in this chart, you are especially vulnerable to the possibility of a layoff or downsizing:

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Is getting laid off the same as getting fired?

A lay off can have specific implications for your future job search.

In general, a prospective employer will tend to look more favorably at an applicant who has been laid off instead of fired.

Also, as a laid-off employee, you may be able to access job search assistance or work with an employment agency that can help.

If you are fired, a prospective employer might look less favorably on your application; but the situation is not hopeless. Just be prepared to honestly and fully explain the problems that led to your termination.

What to do if you’ve been laid off

Before you do anything else, remember to request a written statement from your Human Resources office clarifying the reason for your termination.

If you have a statement in writing showing that you were laid off (as opposed to fired), this will be enormously helpful in attempts to collect unemployment benefits or secure a severance package.

Your unemployment and/or severance package may help keep you afloat during your job search, so you don’t want to miss out on it if you qualify.

While every employer is different, most companies determine severance based on the number of weeks you’ve worked there. However, a few of them factor in your position level, and others have no set formula at all.

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Generally, your employee manual is the best resource to find out what you might be able to get for severance. You could also talk to your Human Resources department. Though employers are not legally required to provide severance packages, it still might be good to look into.

Once you’ve figured out severance and unemployment benefits, the next step is to secure some work references for your future job search.

A positive recommendation, Praise on Jobcase, or LinkedIn comment from a supervisor and some of your coworkers can go a long way toward making an impression on a potential employer in the future.

And last but definitely not least, make arrangements to collect your final paycheck.

Depending on the company, your employer may be required to give you your final paycheck immediately. If not, make sure you know when to expect it and how it will be delivered.

It’s also important to check on any accrued sick leave or vacation time you might have coming to you.

In some states, employers are required to give you any paid vacation time at the time of a layoff. However, this is different in the case of furloughed employees during temporary unemployment.

Why you should determine the nature of your termination

The reason for your termination is sure to come up during job interviews in the future, especially if it leads to a noticeable gap in your employment history.

When prospective employers contact your references, it’s critical that their story matches yours. If you file for unemployment benefits, there’s a good chance that they will contact your former employer, also.

Find out from your employer how he or she plans to frame your termination in the event of being contacted for a reference or speaking to the state employment office.

In most cases, you are entitled to a written reason for your termination. The exception might be if you are an “at-will” employee. But even so, it’s still reasonable to ask for an employer issued statement. If you don’t receive one, consider emailing a letter to your employer politely asking for one.

Ideally, your employer should furnish you with a letter that looks something like this example from Zenefits:

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Note that this example letter, besides giving the reason for termination, also spells out specific details regarding unused vacation time, health insurance coverage, and the expected date and mode of delivery for the last paycheck.

Getting a letter like this can help you take better control of your future as you embark on your job search.

Here are a few other final steps in the process.

Release of claims

You may be asked to sign an employment separation agreement in return for your severance package.

If you are asked to do so, read everything carefully and make sure you understand it. Avoid reading and signing it quickly - especially when you’re under stress. A lay off can be a very emotional event that can take time to process. And emotions can cloud your judgment.

Take the time to read it when you’re feeling calm.

In some cases, it may be appropriate to contact an employment lawyer before signing this document to make sure you aren’t relinquishing your rights.

Collecting unemployment

Check with your state unemployment office to find out how to begin collecting unemployment (and how much you’re entitled to).

If you have been terminated through no fault of your own, you will be eligible for unemployment benefits in most states.

Know your rights

Find out what your rights are in terms of accrued time, retirement benefits, and Consolidated Omnibus Budget Reconciliation Act (COBRA) health insurance coverage before you leave.

In some situations, you might also look into whether or not you are the victim of wrongful termination.

For example, if your layoff was the result of discrimination or if you were asked to participate in an illegal act as a condition of your employment, there are federal and state laws to protect you.

It may be best to consult an employment attorney if you feel this is the case.

Moving on

Any kind of job loss can feel devastating, no matter the reason. But it doesn’t have to be a death sentence for your career.

Armed with the right information about your termination, you can feel confident in moving ahead into whatever the future holds.

Connect with the Jobcase community today to get help with opening the next door to your career. Check out our Unemployment Resource Center for more guidance on navigating unemployment.