What's the Difference Between Being Laid Off and Getting Fired?

Were you laid off or were you fired? Think it makes no difference? Think again. “Fired” tends to have a much more negative connotation than “laid off.” Though it’s possible to be a good employee and be fired, you should still be aware of the associations future employers might have to the terms you use.

Which is Which?

Being laid off is usually considered the fault of your employer. It's usually either due to budget cuts or corporate strategy/reorganization, and often after mergers. Sometimes even the best employees are laid off—such as when cuts are imposed across the board. It could even be that an entire regional office was closed. Being fired is a little different. There is usually a cause and that cause is usually an employee’s poor performance. This will be tricky to explain to future employers. There are plenty of reasons you could be fired that actually don’t reflect on you at all. And many states in which employees work “at will”—meaning they can be fired at any time, for any cause, or even no cause. The main reason you could be fired illegally would be for reasons of discrimination, but those situations are tricky and require an employment lawyer.

Why Does it Matter?

First of all, if you’ve been laid off, you might be eligible for unemployment benefits. Or even severance pay or other exit benefits. If you were fired, you won’t. If you were fired, you’ll also have to start honing the story you’ll tell future employers about why you were fired—and doing so without trashing the company or your supervisor. Find a way to explain your termination that doesn’t cast you in too negative a light, but also doesn’t throw anyone else under the bus either.

What Should You Do?

If you are eligible for unemployment, check in with your state unemployment office for details of how to proceed. Educate yourself about the rights of unemployed workers in your area. And start looking for a new job as soon as you can! If you are eligible for severance, inquire with your employer as to their policies. This is not required by law. You are also entitled to any unused vacation days or deferred compensation in the form of stocks. No matter what, you should inquire as to your company’s COBRA benefits, to continue your health coverage. Most companies have to provide 18 months after separation. The monthly premiums will be expensive, but paying it is better than the alternative.

Bottom Line

If you’re not sure, it’s best to ask your supervisor. If you live in an “at will” employment state, they are under no legal obligation to tell you why they fired you. But you are allowed to ask how they will refer to the termination if used as a reference. Better to know whether you were laid off or fired than to lose a future job because you made an incorrect assumption.