What’s the Difference Between Getting Laid Off vs. Fired Anyway?

Your friend just texted you: She got fired from her job. But when you explain the details of her termination to your husband later that night, he has a different take: It kind of sounds like she was let go? Here’s why it matters: The difference between being laid off and getting fired is critical, especially since it informs the steps you take next. (Will there be severance? Can you collect unemployment? All Q’s you’ll need answers for.) Here are the subtle distinctions—and what you need to understand before walking out the door for the last time.

Unlike a firing, being laid off is a no-fault situation and usually a marker of an internal issue at a company. Common reasons for layoffs include things like downsizing or a company-wide restructuring. In addition, layoffs often occur after a merger or acquisition, or following a loss of funds that were supporting a given department or role.

Another key distinction is that layoffs typically include severance based on the length of time you’ve been employed. (In some cases, employees are paid one or two weeks’ salary for every year they’ve been with the company.) Also worth noting: When a severance package is offered and accepted during a layoff, you waive the right to legal action related to your termination.

There are financial implications too: Employees who are laid off have the right to file for unemployment, though rules may vary from state to state, and your HR department will have more information and can explain how to file.

When a person is fired (rather than laid off), it’s an indication of performance issues—think habitual lateness, poor attitude or inability to perform the job.

Most folks are hired as employees at-will, which means they can be fired for pretty much any reason, barring an illegal one like discrimination. (An alternative to being an employee at-will might be if you are part of a labor union. The details of your type of employment—and what it means when it comes to termination—will all be spelled out in your contract when you accept the original job offer.)

Either way, HR will confirm the exact reason for your termination: If you’re being laid off, they’ll go over a change in company objectives, funding or direction. If you’re being fired, they’ll outline the performance issues that led to this final result.

The biggest downside to a firing is the fact that most companies will not offer severance or financial support. In addition, the option to collect unemployment varies by state. Per an HR expert we chatted with, if you were fired for misconduct, collecting unemployment is a no-go. But if it’s because of poor performance or lack of skills, it could still be an option. You’ll need to ask.

Whether you were laid off or fired from your previous job, you’re going to have to talk through it at your next job interview. Layoffs, of course, are much easier to explain. But if you were fired, offer a brief explanation of the incident, what you learned from it and why you’re still the best person for the job at hand.

Bottom line: Being laid off or fired from a job is more common than you’d think. Just be sure you truly understand the difference from your HR department so that you can learn from it and, if applicable, collect the appropriate compensation.