Being Laid Off vs. Getting Fired

How to establish the nature of employee termination

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What is Being Laid Off vs. Getting Fired?

The key difference between being laid off vs. getting fired is that a layoff is the fault of an employer while a firing occurs because of the employee’s fault. Most workers get laid off because the company is trying to cut costs, reduce the staff, or due to mergers and acquisitions.

For example, let’s say Company A is taken over by new management. If the new owner wants to reorganize the company’s structure, he may resort to laying off workers in order to eliminate redundant tasks.

Getting fired is a little different from being laid off. An employee gets fired because of poor performance, failure to meet the company owner’s expectations, or office theft.

Being Laid Off vs. Getting Fired

The Distinction between Being Laid Off vs. Getting Fired

It’s very important for workers to determine the nature of their termination – between being laid off vs. getting fired. The reason for the fact is that it affects their eligibility to get future jobs. More specifically, workers who get laid off can get jobs more easily compared to those who got fired.

If an employee lost his job because the company was trying to cut down on costs, then he can explain the situation to his future employers. On the other hand, if an individual lost his job because of unsatisfactory performance, then future employers won’t be so willing to give him a position.

What’s Next?

Becoming unemployed can be one of life’s most stressful experiences. The higher the position an employee held in the corporate structure, the more the significant impact from the job loss. Whether one is laid off or fired, the experience can cause a lot of pain, anger, and confusion.

Employees whose contracts get terminated should share their experiences with a spouse, friend, or counselor. If they don’t, they can be overwhelmed by depression. In addition to sharing their emotions with loved ones, here are a few things to consider:

1. Establish the nature of the termination

If the reason for letting go of an employee is not clear, then the affected person should seek clarification on the matter. The nature of one’s termination affects his eligibility to secure jobs with future companies. Also, workers who are laid off are entitled to certain benefits than if they were fired.

2. Check on the severance package

Severance package refers to the compensation and benefits that employees receive once they leave employment at a particular company unwillingly. The amount of severance pay an employee receives depends on the length of their employment with the company. If a worker is laid off, his employer may or may not pay severance pay.

3. Collect final paycheck

Before leaving the workplace, an employee who loses his job should inquire about his last paycheck. More specifically, the individual should find out the when and how his last payment will be made. In some states, the law requires employers to pay their employees immediately after they terminate their contracts.

Keep in mind that the employee being laid off is also entitled to any accrued vacations, sick leave, and back pay. As such, they should inquire from the HR department whether the company owes them anything.

4. File for unemployment benefits

If a worker is laid off because of the company’s fault, he is eligible to apply for unemployment benefits. To receive the benefits, he should first register for unemployment either online, over the phone, or in some states, by mailing a form. Applying online is the quickest way to register for unemployment. In fact, claims filed this way are processed much faster.

5. Get references

Whether one was fired or laid off, he or she should always request for a letter of recommendation, particularly if they were let go because of company layoffs. Also, it’s advisable to ask the company owner how he plans to handle any inquiries made regarding the employee’s time with the company. Ask whether he only plans to share the dates of employment or whether they intend to inform future employers that they fired the worker.

6. Start a job search and prepare for interviews

After leaving the company and wrapping all the details regarding paycheck and departure, the next step is to start hunting for a new job. Research on how to write a good resume, CV, and other employment materials. Research how to answer the most common questions asked in interviews.


Most individuals seek to build longevity when they take up new positions with a particular company. However, for one reason or another, their employment contracts get terminated by their employers.

There are two ways through which one can lose a job; that is, he can get fired or laid off. Differentiating between being laid off vs. being fired is critical to an individual’s prospects for future employment.

Getting fired means that the individual loses his job because he’s been performing poorly while getting laid off means this person loses his job for no fault of his own but the company’s. One might get laid off because the company is cutting down on costs or due to new management.

Additional Resources

CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

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