Laid Off vs. Terminated: The Important Difference

The difference between being terminated and being laid off is vast, but many people are fuzzy on the details! They assume that both are outcomes that can negatively impact your future job prospects.

This article will dive into what it means to be laid off vs. terminated, and what that means for your career going forward.

Laid off vs terminated

What Does “Laid Off” vs. “Terminated” Mean?

These two terms refer to the end of a working relationship between an employer and an employee. That’s the broadest way to look at it, but the terminology used matters greatly in this context.

From a human resources standpoint, the word “termination” can refer to both voluntary and involuntary separations. Whether you initiate the end of the working relationship by telling your boss that you re quitting (voluntary), or your employer does by ending your work contract (involuntary), it’s all a “termination of employment” to human resources professionals.

But for you, the employee, there are some key differences to understand. 

The verbiage used to describe your departure paints a specific picture that will affect you in future job searches. With a single word, potential employers can develop all kinds of preconceived notions before you even step foot into an office for an interview. So if you see someone has been terminated vs. laid off, what’s really the difference? Are they the same?

The easiest way to look at it is where the fault lies.

Laid Off

If you are laid off, your contributions to the company are no longer needed. You didn’t do anything wrong per se, but your employer had to let you go for one reason or another. In most cases, it’s because of corporate restructuring, downsizing, economic struggles, or other factors that are outside of your control.

In this case, you’re impacted by the company s decision. The fault doesn’t lie with you but rather with your employer.


Termination is the opposite scenario. Generally, being “terminated” means being fired, and your employer no longer wants you to be part of the organization. Instead of continuing your employment, they’d let you go and look for someone else to fill the position.

Termination is specific to you or your performance and usually pertains to something that’s entirely within your control. For example, you might be part of internal conflicts or have poor work performance. Whatever the case may be, the fault lies with you.

The Difference Between Them

Ultimately, that’s the most significant difference between termination and layoffs. With a termination,

you’re being fired because your work or behavior isn’t meeting company expectations, and the company will hire someone else to fill the vacant position you leave behind.

But for a layoff,

it was the company s decision to release you from their payroll, and the company probably won’t replace you because the position you once had no longer exists.

While many people attempt to fight terminations and layoffs, it’s important to remember that a vast majority of the country follows at-will employment presumptions. Essentially, that means companies can terminate employees “at will” for any reason or no reason at all (although there are exceptions).

As long as the reasoning isn’t discriminatory or illegal, you can be terminated for any reason. Even if the firing is based on an honest mistake, it’s still legal in most cases.

An Example of Being Laid Off

To help you better understand the difference between being terminated vs. being laid off, let s look at some examples of each. To begin, we ll start with a layoff.

Example 1

In this first scenario, the layoff results from a company acquisition and the duplication of certain positions. Let’s say that one retail company wants to acquire a smaller competitor in a similar market sector. In doing so, it expands its market base and adds a brand-new lineup of products to its umbrella of labels.

That situation happens pretty often with big retailers. For the most part, mergers like this can benefit the broader company, but it does create duplicate positions that only layoffs can fix.

Let s say the larger company that’s initiating the acquisition already has a solid and successful customer service department, so it doesn’t need the team from the smaller competitor.

As a result, the retail company will close the second customer service department and lay off those employees. In this case, the end of employment for those customer service agents is due to no fault of their own. They’ve been laid off as the result of a corporate merger.

Example 2

Let’s look at another example. In this scenario, we’ll look at a video game company experiencing financial hardships. Previous products were a huge hit, but newer competitors entering the market space has caused more recent titles to underperform.

The operating budget is tight, so management has no choice but to adopt cost-saving measures. They keep head designers and programmers but outsource creative artists. The company can experience significant savings moving their work, asset creation, out-of-house.

Unfortunately, those digital artists are laid off. In this example, the artists are impacted by both company downsizing and outsourcing. But like before, the end of their employment is through no fault of their own.

There are many reasons that a company might have to lay off employees. Usually, they happen en masse, affecting entire departments or locations. In addition to downsizing, some examples of layoffs could include:

  • Company relocation
  • Closing branches or stores
  • Mergers and acquisitions
  • Decreased operations
  • Changing market needs
  • Economic downturn
  • Budgetary changes

An Example of Being Terminated

Termination is a bit different, so let s look at some examples to help illustrate the difference.

Example 1

For the first scenario, we’ll look at a keyholder for a coffee shop. As a keyholder, this person is responsible for opening the store every day and performing many administrative duties that are crucial to the shop’s daily operations.

Because it’s a coffee shop, the keyholder has to get in super early in the morning! Unfortunately, this employee seems to be having issues getting to work on time. On more than one occasion, they’ve overslept and forced the store to open an hour later than it should.

Not only did the coffee shop lose a ton of potential business in those crucial early-morning hours, but other employees couldn’t even get into the store to do their job. The employee s tardiness negatively impacts the business across the board.

The shop owner has given the keyholder multiple warnings, even offering different hours so that they could pass the responsibilities onto someone else. But they continued to show up late and cost the shop money. So, they are terminated.

The keyholder did not meet the requirements of the job, and despite warnings, did not change their behavior. Had they taken steps to avoid being late, or found a replacement, they might still have a job.

Example 2

For our second example, we’ll look at a situation becoming increasingly common. Let’s say that an employee causes some controversy online with inappropriate social media posts. Usually, what an employee does on their time at home is none of a company’s business.

But in this case, the employer mentions where they work pretty frequently on their social media accounts. Their social media post goes viral and quickly causes backlash, leading to unfair ramifications for the business. Suddenly, the organization is getting bombarded by negative reviews and calls for action.

While those social media posts happened when the employee wasn’t working, the employee s actions have affected the brand’s reputation. So, employers decide to terminate the employee and sever all ties.

That example can be pretty controversial, but employers are usually within their legal right to terminate employees that poorly represent the business. Other potential causes for termination could include:

  • Low-quality work
  • Theft of resources
  • Poor work ethic
  • General insubordination
  • Unwanted behavioral problems

How to Refer to Each Situation in Your Future Job Search

Whether you’re laid off or terminated, you need to be prepared to explain why you no longer hold a job when you are asked during future job searches. Potential employers want to know why your previous job ended.

But how can you do that if things don’t end well?

Use the Right Language

The most important thing to do is use the correct language. Take some time to practice your explanation before applying for jobs and getting into an interview. A single word can change how hiring managers view you, so getting this right is crucial.

If you were laid off, concisely and confidently explain why. Layoffs are much easier to talk about for most people because they happen all the time. There’s nothing to be ashamed of here. Hiring managers are all too familiar with why companies have to let people go. There’s a good chance that you’re talking to an HR professional who’s delivered that dreaded layoff notification before or has experienced a layoff themself.

Let the interviewer know why you were laid off by referencing one of the bulleted reasons above. Be direct, and don’t forget to use the term “laid off.” You don’t want to sound wishy-washy or make it sound like you were fired in any way.

Now, there’s no doubt that talking about termination is a lot more challenging. But once again, the language you use matters. You can talk about the termination, and we’ll give you some tips on doing just that in a bit.

However, you must tread lightly and ensure that you’re not coming off as a victim or defiant about it. You also don’t want to make it sound like the issues leading up to your termination are ongoing. You have to explain the situation in a way that will make the potential employer feel comfortable about hiring you.

Past terminations can be an instant red flag during the screening call or first interview. Your explanation must reassure employers that those issues won’t happen again.

If Terminated, Show Growth

Don’t assume that you’re unhirable because of past mistakes. Employers love to see growth, and they appreciate it when applicants take responsibility for their actions. Everyone is human, and employers understand that people make mistakes.

But, the key is providing some peace of mind that those problems leading up to your termination won’t occur in this new work environment.

So how do you do that?

It’s all about taking responsibility and using the opportunity to show what you learned from the experience.

For example, let’s say that you were fired for chronic tardiness and attendance issues. After talking about that situation, you could say that being terminated showed you that you needed to make some changes. Maybe you made some lifestyle changes to get to bed earlier and take charge of your sleep schedule.

Talk about that! You can also mention how your termination taught you to communicate issues early and take charge of the situation instead of letting it spiral out of control.

There are many creative ways to talk about how you’ve grown and evolved.

Practice before you have your first screening call or interview so you re ready to give solid answers.

Be Honest and Never Lie

The final tip is to simply be honest. It’s tempting to lie or skirt the truth. It s not uncommon for applicants to try and say that they were laid off when, in reality, they were terminated.

But here’s the thing:

Potential employers can always find the truth.

Most employers aren’t going to go into the details of your termination. In fact, many people don’t mention that they fired former employees at all due to fear of lawsuits. But don’t assume that means you can lie.

A hiring manager could ask if there were any layoffs when your employment ended. With the answer, they know you lied. Suddenly, all they can see is that you’re dishonest and not worthy of working at their company!

Lying doesn’t benefit anyone. Don’t try to fudge the truth. Just be honest and choose your words wisely. As long as you show growth and responsibility, potential employers can look past old mistakes.


It s very important to know what it means to be laid off vs. terminated. However, it s also important to realize that it s possible to recover from both situations.

As long as you understand what employers are looking for and you give well-prepared and honest statements about the past, your future will still be bright!

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