Getting Fired vs. Getting Laid Off

Being fired and being laid off are two possible ways to lose your job. However, they are completely different and this difference can affect your ability to collect unemployment as well as the prospect of being hired in the future by another company. When it comes to getting fired vs. getting laid off, this is what you should know.

What Does Fired vs Laid Off Actually Mean?

To better understand the circumstances, you’ll need to know what being fired and being laid off specifically mean and what steps you need to take.

Being Fired

If you are fired, the company has decided that you are at fault for something that requires termination. You will want to obtain that reason in writing at the time of the firing. This is critical if you feel you have been wrongly terminated.

Make sure you speak to your human resources department about specific topics, including whether there is severance pay. Severance offerings are not the same for every company so you are responsible for finding out what you qualify for. In many situations, you may be able to negotiate what you will receive.

Bear in mind that terminated individuals often do not qualify for unemployment. Even if you feel you were wrongly terminated, take the high road and do not try dragging your former employer’s name through the mud. This can hurt your ability to get hired by another employer.

Being Laid Off

When you are laid off, the company is declaring that it is at fault. They have made changes on their end that have impacted your job. For example, the company could have restructured, downsized a department, or simply could no longer accommodate jobs for all of its employees.

You will need to consult with your human resources department to make sure you have been given all of the necessary exit paperwork. Additionally, you will want to know that you were given the appropriate notice of the layoff and ask if they are offering an exit package.

Speak with your supervisor to request a letter of recommendation as well as a reference on platforms like LinkedIn. This will establish for future employers that you were let go for circumstances out of your control that were not your fault.

Facts About Severance Pay

Losing your job, whether you were fired or laid off, creates a tough situation. Unfortunately, it can be made more difficult because your severance pay is actually taxable. The IRS also extends taxable classification to unemployment benefits and any payments for unused vacation or sick time.

All of these payments are considered taxable for the year in which you received them. Your former employer may withhold the taxes before distributing the money. You may receive your payments in installments or one large payment.

Severance pay is subject to Federal Unemployment Tax, Medicare and Social Security Tax, as well as federal and state withholding taxes. The IRS considers severance pay to be supplemental wages, even though it is the final payment you will receive from your employer.

Being Fired vs. Being Laid Off: The Aftermath

Being laid off is a much easier situation to explain in a job interview than being fired. Potential employers are often more sympathetic to those who have been laid off because those situations are out of their control.

You will have to be able to fully explain whichever situation applies to you. If you were terminated, be upfront and honest during your interview. Don’t place the blame on your previous employer and provide ways in which you have personally improved since the termination.

Take This Time To Regroup

Getting fired vs getting laid off can be a confusing situation if your employer is not clear with you. Clearly establish what is happening and then take this time to financially and professionally regroup.

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