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What’s the Difference Between a Termination versus a Layoff?

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Employee ReleaseI got into a discussion last week with a friend about the difference between a “termination” and a “layoff.” Fortunately, neither one of us is dealing with it and so it was more of an academic discussion. It was part of a discussion about the Worker Adjustment and Retraining Notification Act (WARN Act) and how employers with 100+ employees must notify workers under certain conditions if they may lose their jobs. It covers plant closings (if they are planning on closing a site and the shutdown will affected 50+ employees during any 30 day period) as well as mass layoffs.

What I didn’t know was that there is a small difference between a layoff and a termination. Technically, a termination is when you fire someone and there’s no chance they’ll be rehired at a future time. A layoff is when someone is let go because there isn’t enough work and could be rehired if business improves. You say potato, I say potato… OK that doesn’t work in print but you get the idea.

Outside of an academic difference, there are unemployment benefit ramifications but those vary from state to state. Usually, if you’re terminated for cause (that is, fired for a good reason), you may not be eligible for unemployment benefits. For example, if you were fired because you stole something, failed a drug test, or some other violation – you probably won’t get benefits. If you were fired because there wasn’t enough work, then you’d be eligible. For example, Maryland has extensive rules regarding this and you’re welcome to review it. :)

Beyond that, people use the terms interchangeably at times. “Being laid off” sounds better than being “terminated,” and technically it is because it’s not your fault you’ve been laid off, but either way you’re out of a job.

(Photo Credit: tendolab)

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7 Responses to “What’s the Difference Between a Termination versus a Layoff?”

  1. Being fired also makes it harder for you to find your next job than being laid off!

  2. freeby50 says:

    I’ve always understood “laid off” to mean that you’re let go because there isn’t enough work. However “termination” I’ve seen usually used when you’re fired for cause.

    It used to be that laid off employees might get rehired and that can still happen at some places, but it is more the exception than the rule now it seems.

  3. fabclimber says:

    I live in an “employment at will” state. No reason has to be given for termination. Typically employers don’t try to deny unemployment benefits unless the termination is for a really bad offence.

    Many large employers will refuse to give details about job performance for legal reasons.

  4. Shafi says:

    Of course, in a layoff companies let go folks who have shown less or mundane performance. Firing is when the employee has done something that the manager doesn’t like such as coming in late all the time, not finishing your project on time, and just pure nuisance in the company’s environment.

    The manager initiates firing. Human resources initiate layoff per the request of C-level executives especially the Chief Financial Officer.

  5. elloo says:

    My company came up with a new term for letting go 1500 employees. They call it “reallocation.” So, I am “reallocated” to the unemployment line.

  6. Jennifer says:

    We have a few places in town that regularly do layoffs of employees as the work load changes. Since it is usually public that they are doing the layoffs I can see how that would benefit an individual when looking for another job. They can claim they were let go because of decreased work volumes. Either way, I can’t imagine it feels to good to be fired or laid off. Neither one has to be easy to explain when looking for another place to work.

  7. admiral58 says:

    The biggest difference is the unemployment benefits. You can apply either way, and it’s up to the state to accept or reject the application. If I was out of a job, I would apply.


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