Career Planning Finding a Job Navigating Unemployment Getting Fired vs. Getting Laid Off By Alison Doyle Alison Doyle Facebook Twitter Website Alison Doyle is one of the nation’s foremost career experts. learn about our editorial policies Updated on December 15, 2022 In This Article View All In This Article Getting Fired vs. Getting Laid Off Determine the Nature of Your Termination Release of Claims Collecting Unemployment Know Your Rights Frequently Asked Questions (FAQs) Photo: sukanya sitthikongsak / Getty Images You’ve recently lost your job. If the termination was a surprise, you may have a lot of questions about your situation. But right now, there’s no more important question than this: Were you fired—or were you laid off? 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. Key Takeaways When you are fired, typically it’s because your employer finds some aspect of your work performance unsatisfactory.When you are laid off, the cause usually relates to a lack of work or challenging economic conditions.If you’re terminated for cause, you may not be eligible for unemployment benefits. Regardless of how you lose your job, it’s always wise to file for unemployment just in case. 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. Note When an employee is fired, there is no expectation of being rehired at a future date. This type of termination is not temporary and is related to the employee’s performance or behavior, not to the company’s financial situation. 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. Note A layoff may be temporary, and the employee is rehired when the economy improves. 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. Note Don't sign anything in the heat of the moment, directly after learning of your termination. In addition, it's often wise to consult an employment attorney. 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. Note If you are unsure whether or not you qualify for unemployment, check with your state unemployment office. 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. Frequently Asked Questions (FAQs) Can I say I was laid off if I was fired? It’s always best to be honest during the job interview process. If you say you were laid off when you were really fired, the employer is likely to find out that you were dishonest when they perform a background check. Instead of stretching the truth, prepare to discuss your termination in brief and honest terms, and then move on. Is it better to quit or be laid off? Unless you have significant savings or another job lined up, being laid off may be preferable to quitting your job. You’re likely to qualify for unemployment benefits, for which you would be ineligible if you quit. You may even get a severance package if you’re laid off, which you certainly won’t get if you resign from your position. However, if you feel that you’re likely to be laid off soon, it’s a good idea to start looking for another job. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. U.S. Department of Labor. "How Do I File for Unemployment Insurance?" National Conference of State Legislatures. "At-Will Employment - Overview." U.S. Department of Labor. "How Do I File for Unemployment Insurance?"