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If You Were Laid Off, You Weren't Fired! Know the Difference

By Susan P. Joyce

Involuntary job loss is a tough experience! I've been laid off twice, and I know.

If your employment was ended, you were either fired (a.k.a. "terminated" or "sacked"), or you were laid off, unless you quit or resigned voluntarily.

[Before you quit, read Don't Quit Your Job.]

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It is important to understand the difference between these terms for two very important reasons:

  1. Explaining to someone (a potential employer, network contact, friend) why you are job hunting. Being fired has a more negative connotation to it than being laid off.
  2. Qualifying (or not) for unemployment compensation. If you quit or are fired, you don't usually qualify for unemployment compensation.

Good employees are laid off, and good employees are also fired. Neither process is as logical and well considered as most people think.

Be Sure to Use the Correct Terminology

Especially if you have been laid off, do NOT consider yourself "fired." Your employment was not terminated because of your poor performance. It ended because of bad luck -- wrong place/wrong time.

If you were fired, do not represent yourself as "laid off" because an employer checking references will discover the truth pretty quickly. But, do put your job loss in the most positive terms, and don't describe yourself as "terminated."

What Is a Layoff?

Being laid off is NOT the same as being fired because it is not considered to be the fault of the employee. It is, actually, the fault of the employer.

A layoff is often called a "reduction in force" or "down-sizing." Sometimes, it is euphemistically called "right-sizing" by management and/or Wall Street.

The cause of the layoff is typically a change in the employer's financial strength or a new direction for corporate strategy -- nothing to do with the employee unless the employee is in senior management, responsible for the bad situation.

Since employee salaries and benefits are often the biggest item in an employer's budget, that is often the budget item that is singled out for reduction.

Employees are not usually selected for layoff because of their performance, although sometimes employers (and others) don't understand that. Consequently, unless the layoff is a big news item across the local area, a layoff often requires an explanation in a job interview or networking discussion.

While it may be logical for employers to lay off their least productive employees, often sections of the company are required to "cut" 5% or 10% (or whatever) of their staff, usually stated in terms of budget dollars. This is often the reason that more highly-paid employees seem to be on the layoff candidate list.

Be ready with an explanation of your layoff, like this one:

At Example Co, demand for our main product dropped quickly and dramatically when a competitor introduced popular new technology. So, management determined that they need to reduce the workforce to eliminate some expenses. Since my department was responsible for maintaining the equipment used to produce the failing product, the department was reduced to two people and seven of us were laid off.

Layoffs happen relatively often. For example, in May of 2013, the last year the U.S. Department of Labor tracked "mass layoffs," there were 1,300 layoffs with more than 50 employees laid off in each.

A layoff is usually the termination of a group, or part of a group -- from five or ten employees to hundreds or thousands of employees:

  • Sometimes all of the employees who are laid off work in specific divisions which have been designated as over-populated or excessively expensive.
  • Sometimes the layoff may focus on the employees in a few job titles or even a specific location.
  • Often when one company acquires another company, many of the employees in the acquired company are laid off because the acquiring company already has people doing those same jobs.

Somehow, this often seems to translate into the older and/or better paid employees being chosen for the layoff. Since the reason for the layoff is usually expense reduction, this isn't surprising.

[Related: Job Loss Recovery and Layoffs and Layoff Recovery.]

What Is Being Fired?

Being "fired" is a permanent termination of employment, generally "for cause," and the cause is attributed to the employee's poor performance.

If you've been fired, you must be prepared to explain it very carefully to future employers. Maybe a new manager wanted different staff. Or, you had bad "chemistry" with management or customers. Or, a thousand other reasons exist, some legitimate and some not.

Explain why you were fired without trashing your boss, co-workers, customers, or the organization.

[Related: How Employers View You Being Fired.]

The "cause":

  • Your performance was not good enough -- you were late for work, performed your job poorly, stole things at work, or some other misbehavior.
  • Something else is the cause of your termination -- you lied on your resume, your work was OK but your attitude was bad, your work was not OK, you dressed inappropriately, you were dishonest or stole, or you treated other employees poorly.

And those are only a few of the reasons!

In the USA, employers can often fire you without providing a reason, because in most states (not all!) you are an "employee at will."

Unless you have a contract that specifies you will work for a specific period of time, an "at-will" employee can lose their job at any time for any legal (or, sometimes, illegal) reason the employer chooses.

Even employment contracts may be terminated by the employer, depending on the language in the contract and the laws in that state or country.

An illegal reason to fire you could be many things including firing you because of your race, age, or because you reported the employer to authorities for doing illegal things.

If you think you may have been fired illegally, look for an attorney who specializes in employment law, but don't expect a quick fix to the problem.

[Related: Age Discrimination in Job Loss.]

More Information on Surviving Job Loss

About the author...

Online job search expert Susan P. Joyce has been observing the online job search world and teaching online job search skills since 1995. A veteran of the United States Marine Corps and a recent Visiting Scholar at the MIT Sloan School of Management, Susan is a two-time layoff “graduate” who has worked in human resources at Harvard University and in a compensation consulting firm. Since 1998, Susan has been editor and publisher of Follow Susan on Twitter at @jobhuntorg and on Facebook, LinkedIn, and Google+.

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