Career Advice

Laid Off vs Terminated: What’s The Difference?

In a world where there is already only a small room reserved for employment, when someone loses a job, it is never welcoming. No matter how much they sugarcoat the news, it is never a pleasant one. 

There are many people out there who experience this loss daily and the reality is very hard for them to accept. Some feel traumatized and frightened after their career loss while some still feel motivated to start on a new path. 

Both types of people happen to pass through a breakdown phase which at first seems a dead-end where they can feel depressed or stressed about not working anymore and what their future entails. However, it is when you finally accept the loss of your job that you are ready to start a new journey! 

Recent statistics have revealed that more than 77,000 Americans lost their jobs at the beginning of 2023 either due to the economic turmoil or the recession caused by the recent Covid-19 pandemic. 

Losing your job usually happens in two ways i.e., being laid off or terminated. Although both put an end to an individual’s current employment status, they have varied impacts on the latent life of a person. To learn how to reply to your employer assertively and how to best cope with the loss, first it is important to understand the difference between both!

This article will distinguish the terms laid off and terminated and help you positively reflect on your loss so you can make a fresh start again. So, let’s face it and make it together in this article!

What Does Laid Off Mean?

Being laid off is something that happens due to organizational problems such as economic breakdowns and other structural factors that are beyond the control of an employer. It has nothing to do with an individual’s mistakes. 

In layoffs, the employer usually terminates the job contract because that is the last resort for them. They, sometimes, do it permanently (when the company is shutting down) while sometimes, temporarily (when there is a chance that things will work out in the future). 

The reason for which an employer may have to choose the laid-off option is either because the company requires a change in its staffing structure or because there is an economic downturn due to which the company can no longer afford personnel to fulfill a role. 

Other reasons for which laid-offs occur include loss of funding, company restructuring, and changing business needs.  

Whatever the reason may be, the initial challenge in being laid off is to accept the news wholeheartedly. You must understand that losing your job doesn’t have anything to do with your performance or work ethic but rather due to external factors, it is beyond your control. 

It is natural to feel sad, stressed, or even depressed when you are laid off but the silver lining is that your employer is likely going to help you find a better job through a good reference or referrals if you leave on good terms. 

Also, if the business situation improves there is always a chance that your former employer will hire you back before looking for other potential hires.

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What Does Terminated Mean?

Being terminated or fired is completely the opposite of being laid off. When an employee is terminated from a job position, it’s generally because he/she may have done something wrong such as poor job performance, violation of the company’s policies, work conflict, culture unfit, or sometimes frequent absences. All these reasons can result in job termination where the employer no longer holds the idea of bringing the person back.

Although the news of termination also comes out of the blue, it gives the employee an edge in the form of advanced notice. A notice is more like an early warning where the employer makes it clear to the employee that if certain things do not change they will be terminated. This way, an employee has the opportunity to correct the mistakes they are making or get the time to look for another job opportunity if termination is inevitable. 

In cases where the advanced notice is not prioritized before the job termination, it is usually considered a wrongful dismissal. Therefore, whenever receiving a termination letter, it is best to observe the reason first because any discriminatory or invalid reason is a violation of employment laws for which an employee can take legal action. 

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The Difference Between Laid Off vs Terminated

Now that we’ve learned what laid off and terminated mean, it is time to differentiate them. Understanding this difference is particularly important because it can help you get back on the career track. 

The following are the 4 key differences between being terminated vs being laid off::

1. Reason for Job Stoppage

Layoffs usually occur in instances where a company is facing losses or in need of a structural change to stay competitive and profitable.  

However, being fired or terminated is usually because of poor work performance or work ethics.

In layman’s terms, lay-offs can occur due to no fault of your own while a termination occurs as a direct result of your actions. For example, a company may lay off an employee because of reduced workload, whereas, it may terminate an employee because of frequent work conflicts and poor performance.

2. Unemployment Benefits

Since laid-off employees lose their job due to the company’s issues, they are usually offered severance packages or other unemployment benefits as compensation for the loss of their job. This can include providing them with continued medical insurance for a certain period or a salary bonus to help them cope with the financial loss of losing a job. 

Sometimes, the employer may also offer outplacement assistance to the employee so that he/she can get help in finding a new job. 

However, when an employee is getting fired or terminated by the employer, he/she is not accommodated with any severance package or compensation, unless otherwise stated on their employment contract. In these cases, their ability to receive unemployment benefits may be more complicated and often depends on the specifics of their termination. 

3. Advanced Notice

Advanced notice is a way to notify employees about a potential termination beforehand if certain corrective measures aren’t taken. A manager or team lead will usually have a private talk with an employee about their performance or work ethic and advice them on what they need to do to avoid a potential termination.  

In case the employee’s performance still does not improve or leads to further misconduct, there is a high chance that the notice will turn into a termination warning. If this happens, termination is almost inevitable.  

When a company decides to lay off an employee, advanced notice is usually not given. However, employees can generally tell when a layoff is coming, especially if they can notice a decline in business performance or changes in the industry. 

However, in many instances layoffs can come out of the blue and employees may not get the chance to prepare for a loss of their jobs which in many ways can feel even more devastating, both from an emotional and mental standpoint.

4. Future Job Prospects

Whether you get laid off or terminated from a job, your resume will show a gap period that may make future job employers anxious and raise questions in the job interview. There is no hiding the fact that you were laid off or terminated but depending on how you handle this phase of questioning there is a good chance that a future employer will still hire you.  

If you’re laid off, things are much easier in your job search. You can simply explain to the hiring manager why your role was terminated due to issues within your former company. This will potentially leave a less negative impact on future job prospects. It is also a good idea to talk about the experience and learning that you gained from your former job as this will give an employer a better idea about your growth mindset and resilience toward potential challenges. 

If you’re terminated from a job position, finding another job may be more problematic. This is especially true if you have been terminated with an ‘ineligible for rehire’ status on your former job. To learn more about how you can reverse this status and still land a decent job check out this article!

Similarities between Laid Off vs Terminated

While there are many differences between the two terms, there are also similarities. For instance, a layoff or a termination comes directly from a company’s higher authorities. 

Both a termination and a layoff are also involuntary on the part of an employee. They are enforced on them by their employers with them having little or no influence on the final decision. 

How To Cope With Both Situations? 

We’ve already talked about how both cases leave a negative impact on your career, but there is still a lot left that you can do to avoid the worst outcomes. 

What To Do When You’re Laid Off?

When you’re laid off, the first and foremost thing you can do is recognize your rights as an employee. Review the contract letter that you signed with the employer and see if it mentions a severance package or any other benefits. 

In case you haven’t signed one, you can consult an employment lawyer to confirm whether things are legal in your case or not. 

Another thing you can do during your layoff is to ask for a letter from HR where the reason for your termination is mentioned. This will be a plus point for your job hunt. 

Next, what you can do is review your retirement plan and learn about the benefits that you can get in case of a layoff. For instance, if it promises health insurance, you should avail of this benefit by either consulting with your employer or hiring a private insurer. 

Another thing you can ask for is a letter of recommendation. While your connection is still strong with the employer, you can ask him for a reference letter that enlists all your strengths and accomplishments in the company. This will again serve as a plus point when you’ll be looking for a job position. 

What To Do When You’re Terminated?

Well, the first thing you need to do is understand the reason for your termination. Learn from your employer about why you’re being terminated. It will be a difficult conversation but equally helpful because it will help you improve in the areas where you lack. 

Next, you can learn about the opportunities that you can avail even after being fired. If you’re leaving the company on good terms, you still have the chance to consult your employer for future job opportunities. 

You can also request the employee to accommodate you with the unemployment benefits like a severance package or compensatory pay etc. The fact that you’re terminated from a job will be exhausting for you but you’ll have to accept the situation so you can make a fresh start. 

Take good care of yourself in the meanwhile and learn about how you can work on your weaknesses so that the same situations can be avoided in the future. 

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The Bottom Line

Though losing a job is a hard-to-face experience, you need to accept that it is not the end of your career. The ups and downs are all part of your learning and therefore, you need to adapt to be able to grow and flourish. This holds true whether you are dealing with the situation of being laid off vs terminated.

Learn that if the current door is closing upon you, there might be a next door awaiting you. So rather than losing it all and damaging your mental and physical health even more, accept the change and prepare yourself for a fresh start. 

Throughout the laid-off and termination phase, make sure to remind yourself that feeling down and blameful are normal reactions. In either situation, understanding your rights and the difference between laid off vs terminated can be critical for moving forward.

To leave the company with a positive image, the reasons, the whole situation, and the process of termination must be well-understood. Any misunderstanding in all these circumstances will create a bad impression in the mind of the employer which is not a good thing for your future job hunt. 

So, do your best and enjoy your new beginning. If you want to learn about the potential hacks that can improve your job productivity, get in touch with Eggcellent Work

About Author

Founder of With over 20 years of experience in HR and various roles in corporate world, Jenny shares tips and advice to help professionals advance in their careers. Her blog is a go-to resource for anyone looking to improve their skills, land their dream job, or make a career change.

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