What is the Difference Between a Layoff and Being Fired?

Layoffs. Being fired. Not exactly the most fun and exciting topics of discussion. However, a lot of the time, the words are used interchangeably. What is the difference between a layoff and being fired?

A layoff is when your company downsizes the workforce and lets you go as a result. Termination (or being outright fired) is when you are let go for some reason unrelated to company layoffs or downsizing.

The most common reasons for getting fired are:

Poor employee performance
Violating important workplace rules
Misconduct (fraud)

Getting fired can be devastating if it comes out of nowhere and without warning. There may be ways to take control over how it plays out by planning ahead. For example, you may receive an advance notice that you’re at risk of being fired or laid off. Putting together a carefully crafted exit package can be an act of self-defense. It can help soften the landing after you find yourself out of a job.

So what is the difference between a layoff and being fired? Let’s get into detail.

What is a Layoff?

A layoff is when an employer downsizes its workforce due to a reduction in demand for its products or services. This can be temporary or permanent. Typically, if the layoffs are permanent, they’re because of poor performance, misconduct, outsourcing jobs overseas, etc.

A layoff is a sign of poor company performance. You’ll see them in times when there aren’t enough customers or clients to go around. It might feel like a layoff makes no sense since it can only hurt the company (not to mention its own prospects). This doesn’t seem to stop companies from laying off employees whenever they need to boost profits and cut costs.

What is Getting Fired?

Firing happens when you’re terminated for causes unrelated to business needs, like poor employee performance. For example, you can be fired because of misconduct that your employer finds out about or breaking an important rule that is against company policy.

Getting fired should never really come as a complete shock to you. The main reason being that it is likely there were signs leading up to it if you looked carefully enough. But sometimes, employees do make mistakes or get caught in circumstances beyond their control and end up getting terminated. In instances like this, avoiding the situation altogether may not have been possible. Still, preparation can help soften the impact by giving you time to prepare yourself psychologically, emotionally, and financially for what’s ahead.

It’s not easy to know when you’re in danger of being fired or laid off. And since you can’t control the future, sometimes things happen that take you by surprise. If this happens, the key is to stay calm and try to figure out exactly what happened so you can better understand where your career went awry. Better still is to be able to plan for an uncertain future. Put together a carefully crafted exit package showing all the skills, resources, and talents that makes you uniquely valuable. Also, put together any documentation like reviews or achievements that have helped you secure new jobs in the past.

How Are They Different?

The difference between a layoff and being fired is that layoffs occur when the company downsizes its workforce due to decreased demand while getting fired is when you’ve been let go for reasons unrelated to business needs.

Layoffs can be either temporary or permanent and are usually because of things like poor company performance, outsourcing jobs overseas, or some other reason in service of the company’s bottom line. Unfortunately, this means that layoffs typically involve your employer showing little concern for how letting you go might impact your life personally.

Layoff decisions tend to be made on a competitive basis – meaning that everyone being laid off gets cut no matter how they perform.

How Are They Similar?

Being laid off and being fired are similar in that both of them hurt in a hard way to describe and understand. However, they are also equally demoralizing, which means they can be highly disruptive to your career plans and result in you feeling depressed or anxious about the future.

The risks for you as a person of being let go are the same no matter what the reason. While several things can help you decide if getting fired is better or worse than a layoff, the biggest immediate advantage of being laid off is that most companies provide severance pay. They may also offer other benefits like outplacement services to people who’ve been let go.

In either case, expect some tough times ahead while you find another job. The primary difference between layoffs and terminations is how much time each provides for those affected to adjust their lives before heading into a period of unemployment.

What’s Better About a Layoff?

The advantage of a layoff is that it gives you more time and warning to make necessary adjustments in your life. While this doesn’t necessarily mean that being laid off will be better for you than being fired. It does mean that layoffs tend to provide employees with more income and benefits like medical insurance and services designed to help them find good new jobs in the future.

What’s Better About Being Fired?

The simple answer is… almost nothing. The main advantage of being fired over being laid off is the possibility of getting unemployment compensation. However, unemployment benefits usually apply only when the situations stem from events that make jobs disappear permanently, like outsourcing work overseas or other causes beyond the control of employees and their employers.

When wondering what is the difference between a layoff and being fired- being laid off is a result of your company downsizing and letting you go while being fired is being let go for a reason related to your lack of performance or misconduct.