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Advice / Succeeding at Work / Changing Jobs

Laid Off Vs. Fired: What’s the Difference and Why Does It Matter?

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Laid off. Fired. Sacked. Let go. No matter which words you use to describe losing your job, it can be a complicated and stressful situation—not to mention downright upsetting.

Though the terms surrounding unemployment are often used interchangeably, they’re not synonyms. You might not think the language matters all that much as the end result is the same: You’re still out of work. But the fact is, the difference between being laid off and getting fired can have a significant impact on your finances as well as your future job search.

If you’re having trouble processing this turbulent and often traumatic life event, here’s one thing you’ll need to understand to help you get through it: Were you actually laid off or fired?

The Difference Between “Laid Off” and “Fired”

In the case of a layoff, the loss of employment is usually through no fault of the employee.

“A layoff usually means there is no longer a need for the position as it currently exists,” explains Adam R. Calli, principal HR consultant at Arc Human Capital.

Typical reasons why a company would lay off one or several employees include:

  • downsizing
  • a reorganization
  • a merger or acquisition
  • loss of a grant or contract for which the employee was originally hired
  • changing businesses needs

“There may be some duties of the position that will live on and be distributed among other staff members to perform, but there’s not enough to justify the ongoing existence of the role and employment of a person,” Calli adds.

Being fired, on the other hand, is often about a specific person and their performance.

“The work still needs to be done,” says Calli. “The existence of the job in an ongoing way is still necessary and indeed of value to the organization. But the performance of the individual presently in the job isn’t meeting the current needs of the firm.”

Typically, being fired is a result of poor performance, a violation of a company policy, or some other act that isn’t in line with how the business wants to operate. But if you’re an at-will employee, you can also be fired for any reason (with a few exceptions including illegal discrimination) or no reason at all.

You should be able to distinguish if you’ve been laid off or fired based on your conversation with your manager or HR representative. For example, if you’re being laid off, you may be told there’s been a reduction in workforce, or that your position is being eliminated, changed, or has become redundant (as a result of a merger or acquisition, for example). If you’re being fired, expect to hear that it’s based on your inability to do the job or that your behavior was considered inappropriate or dishonest. In this situation, you may have already received a warning or been put on a performance improvement plan and your firing may not be a complete surprise.

What Being Laid Off Means for You in the Short Term

One of the most daunting aspects of losing your job is saying goodbye to a steady paycheck. For those who’ve been laid off, severance packages and unemployment can soften the blow and keep you afloat while you look for your next position.

That said, severance is never a guarantee, explains Lisa Shuster, president of People Works, an HR consulting agency that provides customized interactive training programs and coaching sessions.

“Employers offer it first and foremost for legal protection,” she says. “I’d like to think that it’s in the best interest of the employee while they’re looking for a job, but in exchange for that severance, companies are getting an agreement and release of all claims.”

What that means: Typically, a severance package is offered in exchange for the employee waiving their rights to sue for wrongful termination. It may also bar an employee from badmouthing their employer or outline noncompete agreements.

(If you have any doubts or concerns about what you may be agreeing to and potentially giving up, it may be smart to consult with an employment attorney before signing.)

So what kind of severance package can you expect? While there are no hard and fast rules, Amanda Haddaway, Managing Director at HR Answerbox, explains that, in some cases, the length of time you’ve worked for the company is taken into consideration.

“If you’re laid off and severance isn’t initially offered, you can ask for that to be considered,” she says. “Ultimately, it will be up to the business to determine if that’s an option. If the layoff is due to financial problems of the business, it’s unlikely that severance will be an option.”

In addition to or in lieu of compensation, your company may offer you other perks as a way to support you, says Calli.

Some common benefits you might get after being laid off include:

  • Payment for COBRA to extend your medical, dental, or vision coverage while you’re unemployed
  • Job search assistance, like getting a referral to work with an outside agency that can help you find a new role
  • Waiving paying back any tuition money you’ve previously received from your employer

Unemployment benefits—payments made by state governments to an eligible employee who’s been let go through no fault of their own—are usually an option as well as long as you’ve held your previous position for the required length of time.

What Getting Fired Means for You in the Short Term

While most people think employees who’ve been fired don’t receive any parting compensation, Shuster notes that in cases where employees have been improperly coached and thus unable to fulfill their job duties, companies may offer severance to avoid blindsiding the employee.

“I think of it as a matter of good faith and fair dealing,” she says.

Calli adds that you may also be offered a severance agreement in which you waive your right to bring suit against the company in exchange for compensation.

If your company offers you an agreement, “be sure to read [it] carefully so you know what you are giving and what you are getting,” he says.

Employees who are terminated for misconduct typically don’t receive severance, says Stacey Berk, a managing consultant for Expand HR Consulting. Unemployment coverage varies for these individuals as well.

“If an employee is fired because the position is no longer suitable, but they worked to the best of their ability, the terminated employee may still be eligible for unemployment based on the regulations of the particular state and local jurisdiction,” she notes. “If the person is fired for misconduct, there may be a waiting period, or the person may be ineligible for unemployment until they have worked in another job and reached a specific earning threshold.”

How Being Laid Off Impacts Your Job Search

Regardless of whether you’ve been laid off or fired, once you have a gap in your resume you’ll need to prepare an explanation because, like it or not, it will come up in future interviews.

Fortunately, Calli says, in this modern age if you’re laid off, it doesn’t bear the stigma it once did.

“I believe we have the Great Recession to thank for that, because many highly-skilled, good performers found their jobs eliminated as their companies struggled to survive,” he says. “Layoffs happen. The world is a very fluid place. Companies merge, acquire, divest, relocate, go through bad times. If you are laid off, just say why and move on.”

Bottom line, says Shuster: Layoffs can happen to anyone and aren’t something you should dwell on. However, a series of layoffs on your resume will start to raise some eyebrows.

“You may have hiring managers probing to uncover if you were part of group layoffs or if you were singled out each time,” she says. “Because past history is the best indicator of future performance.”

How Getting Fired Impacts Your Job Search

Getting fired, on the other hand, is a different story—literally. Though you may be tempted to hide what really happened, or even fudge the truth, resist the urge to lie, Calli says.

“It’s a small world we live in,” Calli points out. “You don’t know who knows who. And if you are caught in a lie, your chances of getting a job you want go way, way down. But you can try to put the termination in the best light possible.”

If getting fired was a result of a mistake on your part, own it like a professional adult.

“If you pass the blame, you end up coming off as childish and immature,” Calli says. “Even if you are right and your boss was an overbearing and unreasonable jerk, there is still no way you win. Talk about your desire to move forward in a positive way [and] your commitment to success, and put the spotlight back on your qualifications and why you are right for this new role.” Showing that you learned something from the last experience and thus won’t repeat the same mistake again shows maturity and self-responsibility.

Remember that it’s better for you to manage the message then to be managed by it, notes Calli.

“Telling the interviewer(s) honestly that you were let go—don’t say ‘fired’ or ‘terminated’ as those sound even worse—shows them you aren’t hiding anything, and if they check references later and confirm this, it’s not an unpleasant surprise for them,” he says.

He offers the following example script for an employee who’s been fired due to a performance-related issue:

“After working for XYZ Inc. for four years, there were some changes made to the amount of client calls we were expected to process per hour. I used the techniques we were taught after the change took effect, but didn’t want our customer service to slip. Unfortunately, I wasn’t consistently completing the required number of calls, and, as a result, I was let go. I felt really bad about this and in retrospect I could have done better sticking to the process that would have let me meet the per hour quota. But you’ve told me about the customer service standards and the volume expectations here, and I believe it won’t be a problem.”

If there’s a more serious allegation of misconduct besides poor performance—maybe you damaged or stole company property or harassed a colleague—be prepared to face questions in interviews about why you didn’t leave on good terms. Again, don’t badmouth your old company, but focus briefly on what happened, then on what you learned from it and how you plan to do things differently next time.

This situation serves as an important reminder to maintain a network of mentors and trusted colleagues from each position you’ve held, as you may need them as references in the future, Berk adds.

While being laid off or fired from a job are both difficult situations for different reasons, understanding the distinction between the two and how to navigate each scenario can help you move forward successfully. Try to think of these events as small blips that most of us encounter at some point in our careers, and recognize that you’ll overcome this setback just as everyone else does.

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