3 Reasons Why You Should Differentiate Fired Vs Laid Off on Your Resume

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Learn to effortlessly handle the uncomfortable 'Were you fired or laid off' interview question.
Jul 5, 2024 9 min read

When you get fired, it's due to your conduct or behavior. Being laid off, however, is typically due to a business reason, such as downsizing. It's crucial to differentiate between the two because being fired may cause recruiters to view your application with a grain of salt, while being laid off might not affect the hiring manager's perception as much.

You've just experienced a traumatic event at work—your manager has just "let you go". This professional rejection and personal setback hurts.

Before you get too caught up in your thoughts, consider whether you were fired or laid off. While both terms are mistakenly used interchangeably (and result in unemployment), not all job losses have the same implications for your application.

When you're fired, it's crucial to clearly explain why you were let go. In contrast, being laid off doesn't demand such meticulous communication.

This guide will help you to navigate unemployment, get back on your feet, and learn how to:

  • Differentiate between being fired and laid off.
  • Understand the impact that this tiny difference in terminology could have on your future job prospects (and financial stability).
  • Prepare your applications after being fired or laid off.
  • Discuss either situation on your resume, cover letter, and during an interview

What does it mean to be laid off?

Being laid off is similar to that breakup line from a relationship, 'It's not you, it's me!'

You’re being let go by the company, and the reason for your layoff is not your fault. Remember that your skills and contributions remain valuable in the industry.

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Reasons why you could be laid off

You're being let go due to business reasons beyond your control; the company can no longer sustain your employment. Common reasons include:

  • Downsizing and cost-cutting – the company is closing offices, streamlining operations, or adjusting to changing business needs and economic conditions.
  • Redundancy of your position – reorganization, loss of funding or contracts for which you were hired, or reduced operational needs.
  • Business adjustments – staff reductions, mergers, new management, outsourcing, relocation, business closure, or seasonal fluctuations.

Layoffs can sometimes be temporary; you may be placed on a recall list for potential rehire in a few months or return as a contractor. However, permanent reductions in force (RIFs) are more common.

According to Randstad Enterprise, by the end of 2024, 92% of all businesses expect to downsize. In just the first six months of 2024, 60,000 employees, working in the technology sector, have been laid off.

When being laid off, you often receive a range of benefits to ease your transition, which may include a severance package, outplacement services, unemployment benefits under state laws, health insurance coverage, etc.

  • Severance package - provides financial support during your job search and protects the employer from potential legal claims.
  • Outplacement services - offers career coaching, resume writing assistance, and overall support throughout your career transition.
  • Unemployment benefits under state laws - provides temporary financial assistance as you seek new employment.
  • Health insurance coverage - includes medical, dental, or vision coverage for up to 18 months while you're unemployed. Your right is protected under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

What does it mean to be fired?

You've been fired. The company no longer wishes to collaborate with you—they need the work done, just not by you. Perhaps something went wrong or the company found aspects of your performance unsatisfactory.

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Reasons why you could be fired

Your contract can be terminated due to your:

  • Incompetence or consistently poor performance.
  • Failure to meet company standards or expectations.
  • Violation of company policies.
  • Attitude, behavior, misconduct, or impropriety.
  • Unexplained absence from work.
  • Any other serious breach of contract, such as theft.

As you might expect, being fired is typically permanent and generally closes the door for future employment with the company.

In most states, 'at-will' employment is the norm. This means employers can terminate employees at any time and for any reason, as long as it's not discriminatory, retaliatory, or a breach of contract.

When you're fired, don't expect to receive any ongoing benefits. It's typically a clean break with minimal support provided to the former employee.

What is the difference between being laid off and fired?

The key distinction between being fired and laid off lies in this: being fired relates to performance, whereas layoffs stem from external circumstances.

If you've been fired, take ownership of your mistakes and use them as opportunities for personal growth.

If you've been laid off, acknowledge your emotions and give yourself the time to accept and navigate through them.

The first five steps to take if you have been fired or laid off

If you’ve just had that talk with your manager, here are the next action steps you need to undertake:

Clarify the details of your contract’s termination

The most important thing you can do, when you hear the news, is to stay calm and professional.

Determine if you're fired or laid off and why because this will affect your eligibility for future job opportunities.

Understanding the reason can also help you learn what you need to improve in your performance for your next position.

Make sure to ask your employer to provide the reason for your contract termination in writing, so you know what action steps to take next.

For example, if you were fired due to an inability to work with specific software, now is the time to learn those technical skills

Verify the exit paperwork with HR

Determine when the dismissal takes effect when you will receive your final pay, and how to return company property.

  • See if you are entitled to accrued vacation, sick leave, and back pay.
  • Transfer the value of your 401(k) plan into another plan. Your HR department can help explain your options.
  • When laid off, check if the company has given you proper notice of your contract termination, if you’re eligible for an exit package, and if you can keep your health insurance.
  • Find out the severance you’re eligible for, whether you’ve been laid off or fired, and for how long.

Check with your state unemployment office to see if you qualify for unemployment benefits, as this may vary by state. To receive these benefits, you need to register for unemployment (online, over the phone, or by mailing a form).

Get references (or how inquiries will be handled)

If laid off, get a letter of recommendation or a LinkedIn recommendation from your manager. This can make it easier to show potential employers that you were dismissed for reasons beyond your control.

If fired, and you remain on good terms with your employer, ask how the company handles any inquiries regarding your employment.

Start the job hunt

After taking some time for reflection and self-care, restart your job hunt. Revise your resume to include any new skills, certifications, or experiences you may have gained.

Prepare to discuss the gap in your resume

Regardless of whether you’ve been laid off or fired, be prepared to explain the gap in your resume. It will most likely come up in future interviews.

Refine your story and address the situation by emphasizing your past workplace achievements and the lessons learned. This approach will help you transform your seeming challenges into opportunities.

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4 Tips to keep in mind when talking about being laid off vs fired
  • Differentiate between the two terms. Generally, those who are laid off find new jobs more easily compared to those who have been fired.
  • Be honest when discussing your employment history. Misrepresenting a firing as a layoff can be uncovered during reference checks.
  • How you frame being fired matters for your reputation. Explain the reason for your job loss and frame it positively, highlighting the lessons learned, and personal growth gained from the experience.
  • Being laid off can be an opportunity to connect with recruiters. If job loss was due to company cost-cutting, it's a more understandable situation for future employers.

Layoffs: How to address them on your resume, cover letter, and in interviews

Once you're ready to begin applying for jobs again after a layoff, the first crucial step is to customize your resume.

Use your resume to market your skills and experiences that are relevant to the role. Avoid including your whole career background, as it could detract from your professional strengths.

How to write your resume after a layoff

  • Consider using a functional-based format instead of reverse chronological (the standard format that lists your experience starting with the most recent role). The functional-based format organizes your experiences based on job requirements, minimizing emphasis on dates.
  • Many organizations use the Applicant Tracker System (ATS) software to manage applications. The ATS can process all kinds of traditional fonts (like Rubik, Montserrat, or Lato), but it can have a problem assessing some symbols, tables, and graphs.
  • Review the job description for keywords related to skills and qualifications. Incorporate these keywords strategically into your resume to match job requirements.
  • Include essential resume sections tailored to the job. Highlight your major achievements in a concise summary (no more than five sentences); detail your relevant qualifications such as work experience, education, and certifications in their respective sections. Showcase technical skills or interpersonal strengths that emphasize your unique value.
  • Updating your resume after a layoff can be challenging and emotional, but strive to write objectively about your previous employer. Be honest about your employment dates. Avoid explicitly mentioning the term 'laid off' on your resume.

If you choose to disclose your layoff during the application process, address it in your cover letter.

Briefly explain that your position was made redundant due to company restructuring or other reasons. Shift the focus to highlight your achievements in your previous role, while expressing your enthusiasm for the new job you are applying for.

Addressing layoff in your cover letter: right and wrong example

Let’s now look at how a real-world professional, who was recently laid off, completely mishandled his recent unemployment in his cover letter.

Recently, I was sacked from my role as data manager: this was both unexpected and unjust. My former employer's decision-making process lacked transparency and fairness. It's difficult to reflect on the lack of support and respect shown towards dedicated employees like myself.

Notice how it's unclear whether the candidate was fired or laid off. The tone is very emotional and includes criticism of the former employer.

The data manager’s approach is one you should avoid in your cover letter.

Instead, here’s what you should do:

As you might have heard, data managers, including myself, were laid off from Z due to budget cuts. While this change was unexpected, I value the experience gained in working with Big Data. I was grateful for the opportunity to have improved Z's data processing efficiency by 65%, by designing and implementing scalable data architecture.

The data manager has shifted the focus from being let go and his negative emotions, to his actual impact in the role. He has included his biggest achievement that has had an impact on business-crucial systems.

Answering "Why did you leave your job?" during job interviews

When interviewers want to know why you left your last job, don't freeze! Here's how to handle this question if you've been laid off:

  • Practice answering this question at home to ensure you can stay calm and avoid emotional responses during your interview.
  • Proactively address the layoff before the employer hears about it elsewhere. Always be honest about the situation.
  • No hard feelings! Present the reason for your layoff objectively. This would demonstrate your understanding of the circumstances surrounding your contract termination.
  • Keep your answer short. Focus on highlighting new skills or experiences gained rather than delving into minor details or perceived injustices.
  • Maintains a positive and constructive tone, when approaching the topic. Avoid any negativity toward your previous employer.

How to address being fired in your resume, cover letter, and job interview

No matter how much you want to tell the "cruel and wicked" story of your termination, avoid mentioning being fired on your resume or cover letter.

Include only the start and end dates of your previous positions, along with your skills, talents, and achievements with quantifiable metrics, when possible.

Save discussions about details and circumstances of your termination for your job interview.

How to use the interview to present your side of the story

During the interview, wait for the hiring manager to ask specifically about past terminations rather than volunteering this information from the get-go. Then you should:

  • Keep your explanation brief and honest. Resist the urge to hide or embellish the truth.
  • Don't say you were "sacked", "fired", or "laid off". Use "let go" to hide the more negative connotations.
  • Stay professional and don't blame your employer. If you were terminated due to your mistake, own up to it.
  • Frame the termination positively by discussing what you've learned and how you plan to apply these lessons.

How to talk about being fired during your interview: real-life examples

Let’s have a look at how a candidate turned the situation around by:

  • Acknowledging his lack of relevant skills that led to his termination.
  • Highlighting the proactive steps he took to enhance his skills and knowledge.
  • Showing the new skill he learned, after being fired.

“In my previous role, I was let go because I lacked the required skill set for the position. Over the past six months, I've been dedicated to improving my skills, particularly in Java. I've learned valuable lessons from that experience and now feel confident in my abilities to contribute effectively in a role like this.”

What if you’ve been let go due to your misconduct?

“I was let go due to behavioral issues. This experience prompted me to reflect deeply on my actions and their impact. Since then, I've been focused on personal growth, particularly in improving my professionalism and interpersonal skills. I've learned valuable lessons from this experience, and I'm committed to applying those lessons to contribute positively in my future endeavors.”

The answer works, as the candidate:

  • Was honest.
  • Took the time to reflect on his behavior.
  • Demonstrated a commitment to learning.
  • Showed a future-facing mindset and attitude.

And here’s how you could frame a more serious offense:

“I was let go because I inadvertently breached company policy by working for a competitor. I deeply regret this mistake and have since taken responsibility for my actions. I've learned important lessons about loyalty and the importance of understanding and adhering to company policies. Moving forward, I am committed to ensuring full compliance with company guidelines in any future roles.”

By expressing regret and taking accountability for his actions, the candidate doesn’t avoid the uncomfortable question.

Instead, he demonstrates the lessons he learned.

Now, it’s entirely in the recruiters’ hands whether to continue his application.

Key takeaways

Now that you understand the difference between being laid off and fired, you're ready to pursue your dream job.

Just remember:

  • Being laid off typically results from business reasons, whereas being fired stems from actions or performance issues.
  • Upon termination, ensure you receive written clarification of the reasons and gather all necessary exit paperwork. Whenever possible, request references from your manager.
  • During your job search, be prepared to address any resume gaps. If you were laid off, focus on the facts and what you've gained from the experience. If fired, approach it with honesty and discuss the lessons learned from your mistakes.
  • You can mention being laid off in your cover letter and job interview. If you've been fired, be prepared to explain the circumstances during your interview, but only when asked directly.

Make your move!
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Volen Vulkov
Volen Vulkov is a resume expert and the co-founder of Enhancv. He has written more than 500 resume guides and deep-dive articles on how to create your resume and cover letter, that inspire job applicants to make a resume to be proud of. His work has been featured in Forbes, Zendesk, HubSpot, and Business Insider, and cited by top universities and educational institutions, like Thunderbird School of Management, Rochester University, University of Miami, and Udemy. Volen applies his deep knowledge and practical experience to write about career changes, development, and how to stand out in the job application process.
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