Here’s what you need to know about the differences between being fired and being laid off, and how to know where you stand when you lose your job.
Getting Fired vs. Getting Laid Off
Being fired and getting laid off are two distinct ways of losing your position, and the difference can impact your eligibility for unemployment, as well as your hiring prospects for the future. It’s a good idea to be very clear about the precise nature of your termination, should you lose your job. If that sounds like it should be an easy distinction to make, you’re right: Ideally, your former employer would be very clear about the nature of your separation from the company. But as we know, the real world is often far from perfect.
When an Employee Is Fired
An employee can be fired for many reasons. Perhaps the most common reason for being terminated for cause is an unsatisfactory performance on the job. Workers might also be fired for misconduct, not complying with company standards, taking too much time off, damaging company property, embarrassing the organization publicly, or otherwise failing to adhere to the terms of their employment contract.
When an Employee Is Laid Off
When an employee is laid off, it typically has nothing to do with the employee’s personal performance. Layoffs occur when a company undergoes restructuring or downsizing or goes out of business. In some cases, laid-off employees may be entitled to severance pay or other employee benefits provided by their employer. Generally, when employees are laid off, they’re entitled to unemployment benefits.
When an Employee Is Furloughed
An employee may be furloughed instead of laid off. When an employer furloughs workers, there is an expectation of returning to the job. The worker may be able to continue health insurance and collect unemployment benefits during the furlough.
Determine the Nature of Your Termination
As a newly terminated employee, the first thing you need to figure out is how your former employer will characterize your separation from the company. If you are an at-will employee—and workers not covered by an employment contract in most states in the U.S. are—your employer is under no obligation to furnish you with a reason for your termination. But it’s still appropriate for you to ask them how they’ll refer to your termination when speaking to future employers and the state unemployment office.
Release of Claims
Typically, employers will ask laid-off employees to sign an employment separation agreement, sometimes (but not always) in return for a severance package. It’s always a good idea to take time to read and consider the agreement before signing.
Collecting Unemployment
To collect unemployment, you typically need to have lost your job “through no fault of your own.” People who are laid off are likely to receive unemployment because they left due to restructuring, rather than personal performance. People who are fired are less likely to receive unemployment because they left due to issues with their personal performance. However, if a fired employee can argue that their firing was unfounded or unrelated to performance, he may be eligible for unemployment.
Know Your Rights
If you lose your job unexpectedly, it’s important to know where you stand. You may be legally entitled to pay for unused time off, for example. Your former employer should also tell you what to expect in terms of receiving your last paycheck, rolling over retirement benefits, and accessing COBRA coverage. It’s also important to know whether your separation from the company counts as wrongful termination.
