What Are the Implications of Being Fired Vs. Laid Off? 

Updated Dec 21, 20228 min
What Are the Implications of Being Fired Vs. Laid Off? 

What Are the Implications of Being Fired Vs. Laid Off? 

Caroline BantonUpdated Dec 21, 20228 min
What Are the Implications of Being Fired Vs. Laid Off? 

We get it. Given the choice between being laid off and being fired, you’d probably choose neither; however, the Coronavirus has made job loss a reality for many. There are significant implications to the circumstances of job loss. For example, certain benefits were made available to those who experienced job loss under the CARES Act, but they differ depending on the circumstances.

Because of changes in unemployment policies, it is crucial that you understand your own scenario, its implications, and your rights if you lose your job. This article will explain the difference between being laid off and being fired, what your rights are under each situation, and what your next steps should be.

Being Laid Off Vs. Being Fired

Whether you are laid off or fired impacts both your future prospects and your eligibility for unemployment benefits. If you are unsure why you are being dismissed, seek clarification from your employer’s human resources department so that you know what benefits and payments you are entitled to.

If your employer ends your employment for reasons beyond your control, you have been laid off. Being laid off is often the result of company action. Here are some reasons your employer might lay you off:

  • The company can no longer afford to keep you onboard

  • The company is restructuring or is being acquired

  • The company has a reduced workload and needs fewer employees

  • The company is downsizing

If your employer ends your employment for reasons that you can control, you have been fired. Being fired is often the result of an employee’s action or inaction. Here are some reasons your employer might fire you.

  • Misconduct

  • Unsatisfactory or poor performance

  • Abusing time off

  • Non-compliance with company rules or standards

Typically, a company will provide written warnings to an employee before firing them. These warnings should outline the behavior that is problematic. You might be placed on a performance improvement plan (PIP) before being dismissed. If you are not in a union, which means your employment is "at will," your employer is not required to provide justification for your dismissal as long as it is not due to race, religion, or sexuality. However, it can be difficult for a fired employee to prove that discrimination was the reason for their dismissal.

What Does Being Furloughed Mean?

An employee is furloughed when they are temporarily relieved from work. There is an expectation that the worker will return to work and that benefits, such as health insurance or unemployment benefits, will continue during the furlough. Government workers have been furloughed in recent years when a government shutdown has resulted from budget disagreements.

What Benefits or Rights Do You Have If You Are Laid Off?

If you are getting laid off, you might be offered severance pay. The employer will determine the terms of severance. You might also be entitled to benefits, such as salary and/or health insurance, for a period. In rare cases, you might receive assistance in finding a new job.

What Benefits or Rights Do You Have If You Are Fired?

If you are fired, you do have certain rights. You may be entitled to your final paycheck, and you might possibly be able to claim continued health insurance coverage in the form of COBRA. You may not be eligible for unemployment benefits unless you can prove that you were wrongfully dismissed.

Which Is the Better Scenario?

In most cases, being laid off is preferable to being fired because you stand a better chance of getting another job and receiving unemployment insurance. Another employer is less likely to see you as a risk if you have been laid off, whereas being fired implies unsatisfactory performance. 

If you are laid-off, which has become a common occurrence during the recent COVID-19 pandemic, a future employer will understand that it is not a reflection of your performance. You might even be a prized commodity if you are talented and a company has had to let you go for financial reasons.

The difference between being laid off and being fired is significant when it comes to unemployment compensation. If you are fired, you have no rights to unemployment insurance benefits. If you are laid off, you may qualify for unemployment benefits. For more information, check with your state’s unemployment agency. Depending on your state, you may have to accept a rehire offer or lose your unemployment eligibility.

What to Do If You Are Terminated?

If you feel that you were let go for discriminatory reasons, asked to commit an illegal act, or because you’re a whistleblower, you should consult an employment law attorney because wrongful termination might mean that you are protected under state, federal, or contract law.

Whatever the circumstances, it can come as a shock to be terminated. Some companies give plenty of warning so that employees have time to find alternative employment. Other companies choose to announce layoffs suddenly to avoid a falloff in productivity.

If you find yourself unexpectedly without a job, here are the steps you should take.

  • Find out the reason for your dismissal. This will help you to understand what you are entitled to in terms of unemployment and retirement benefits.

  • If you are an at-will employee, with no union, your employer does not need to give a reason for your termination, but you should ask how your ex-employer will refer to your termination when speaking to future employers and the state unemployment office.

  • Contact HR to find out what your employment contract allows you, when you will receive your last paycheck, how much you will receive, and what it will include in terms of accrued vacation, sick leave, and retirement benefits.

  • If you have concerns about the circumstances of your dismissal, consult an employment attorney before signing any agreements, such as an employment separation agreement. You might unwittingly sign away some important rights if you do.

  • If you were laid off from full-time employment, ask your supervisor for a letter of recommendation or reference. This will show potential employers that you were dismissed for reasons out of your control.

  • Check with your state unemployment office to determine if you qualify for unemployment benefits.

  • If you have a 401k pension plan, transfer it to another plan. HR should be able to explain your options.

  • If you are laid off without a severance package, you might be able to negotiate one. Many companies would rather employees who are let go leave on good terms rather than risk negative publicity or disruption among co-workers.

  • You might be eligible to receive health insurance for a period under the Consolidated Omnibus Budget Reconciliation Act (COBRA) even if you are fired. Your HR representative should guide you.

It’s important to give yourself a period of time to digest and come to terms with job loss. If you can, allow yourself some downtime and treat yourself kindly. When you are ready to start a job search, there are some strategies you can apply that will ease the job-seeking process.

Finding Another Job

Now is the time to take stock of your career and think about what type of job you will look for. Stay busy and productive. Learn a new skill. Volunteer or network. All of these actions can round out your resume and show that you used your time productively while unemployed.  

The next step is to update your resume and your LinkedIn profile to show your situation in the best possible light. There is no need to state that you were laid off or fired on your resume; wait for the interview to address these matters.

When you are job seeking, avoid speaking negatively about a past employer to a hiring manager or on social media. It will only reflect poorly on you, and you will burn your chances of a reference in cases of layoff.

If you have been laid off or fired and are facing your first interview for a future job, think about how you will answer the question, “Why did you leave your last job.” Here are some tips:

1. Keep your answer short by moving to another topic that is positive. For example,

My former employer was downsizing, and I was laid off. However, it has been an opportunity for me to concentrate on my coding. I entered some contests and won two of them, which has really given me motivation.”

2. If you were fired, don’t be tempted to lie. The truth will out if the new employer contacts your old employer, which is highly likely. Your best bet is to own it, but to put a positive spin on the situation. For example, show that you have learned from the experience. Here’s an example.

“I was really disillusioned and frustrated because I felt that my career in IT had stalled. I was fired because my productivity had dropped. I took time to focus on my coding instead of just beta-testing, which is what I love to do. I recently won two online competitions, which has really renewed my motivation.”

It can be devastating to be laid off or fired, but it happens to almost everyone at some point. Most likely, you will move on to something much more suited to your skills, likes, and dislikes. This could be an opportunity to reset, improve your professional credentials, and advance your career.

Caroline Banton
Expert on career acceleration and business topics with vast experience writing for globally-recognized publications

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