What It Means To Be Laid Off vs. Fired and What To Do Next

By Indeed Editorial Team

Updated November 30, 2022

Published June 21, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Knowing whether you've been laid off vs. fired is essential when you've been let go from a job. To know what your next moves are, you need to know which situation applies to you. In this article, we discuss how you know whether you've been laid off or fired, what it means for you and which steps to take next.

Related:

  • What To Do When You Get Laid off (With Steps to Appeal)

  • What to Do If You're Fired and Skills for Getting a New Job

How to know whether you've been laid off vs. fired

Both being laid off and fired mean you no longer have employment. When you've been laid off, that generally means you lost employment because the company is downsizing or restructuring the organization. Likewise, the position you hold may no longer be available at the organization. The difference between this and getting fired is that, when you're laid off, it generally occurs for reasons outside your control. When you're fired, this typically has more to do with your job performance. You may also be fired if you have neglected any company policies.

Neither being laid nor fired prevent you from getting a job in the future. But if you were fired, you may not be able to use that job as a reference, depending on the terms in which you left. That's why it's usually considered easier to find new employment if you were laid off vs. fired.

Related: Understanding What it Means to Be Terminated for Cause

What are your next steps after being laid off?

Here are a few steps to follow if you've been laid off and are wondering what to do next.

1. Accepting reality

Your first step after getting laid off is to come to terms with the reality of your situation. You should take this time to slow down and plan ahead before looking for a new job. Getting laid off can cause feelings of both loss and rejection, which is why slowing down and considering these feelings are essential. Because layoffs usually happen for external reasons, you're likely not at fault for the job loss.

Go over all of your options during this time and determine what you can contribute after taking your personal responsibilities into account.

2. Looking over your insurance

Your next step is to look at your insurance policy because you may qualify for benefit coverage several months after being laid off. To look over your insurance, you'll need to ask your employer, who then provides you with the details of your insurance plan. If you were provided a contract when you first received insurance, you can also find the terms and conditions there.

3. Applying for unemployment

When you're laid off, you may qualify for unemployment benefits. You can apply by visiting their website and looking over their various eligibility requirements or by visiting an unemployment office. Depending on your location, it can take several months before you receive money. Be sure to look up the processing times for your application.

Read more: How Does Unemployment Work? Plus How to Navigate It

4. Getting severance pay

Many companies offer a severance package to laid-off employees. In a severance package, you can either be provided with a lump sum of money or you can be paid for several weeks after being laid off. It's not a requirement for employers to provide a severance package, so be sure to either ask your employer or go over your employment contract. If you believe that your employer isn't upholding the terms of your employment contract or if your severance package is lacking, you should also contact a labour law attorney.

Read more: How to Negotiate a Severance Package (With Negotiation Example Letter)

5. Getting your final paycheque

Now, you'll need to find out when you'll receive your final paycheque. When you're asking about this, be sure to ask whether you'll be receiving your paycheque by mail or by direct deposit. Keep in mind that employers vary regarding the time of paycheque delivery, so yours may either send it right away or delay it. When you're laid off, you could also receive your vacation or sick leave. You should ask your human resources what your final paycheque includes and whether you're eligible for the additional pay. If your cheque is being mailed to you or if any documentation is being sent following your job loss, you'll also want to confirm your address with human resources.

6. Learning about the 401(k)

After learning about your final paycheque, you'll also want to find out what happens to your 401(k). Employers vary in the plans they offer, but you can usually keep your plan with your former employer and open an IRA, which is an individual retirement account. Afterward, you can either open your 401(k) in your IRA or you can cash it out. When you find another job, you can ask your employer whether it's possible to consolidate your previous and new plans.

The details of your 401(k) options depend on how long you worked for your employer and how old you are. Some employment contracts require a minimum time worked before you can qualify for full benefits. In this situation, you'll want to use a rollover IRA. If, on the other hand, you're closer to retirement, you may want to wait until retirement to receive your annuity.

Some employers also provide additional retirement packages that you'll want to look into. In some situations, you may lose the additional retirement package when you no longer work for the employer. It'll be important to ask your HR department whether you can bring your retirement package with you or lose it completely.

7. Getting important files from your work computer

If you haven't already done so, you'll want to get any important files from your work computer before officially leaving your employment. Remember to only take your personal files or files that you're entitled to. These files can help you obtain a new job by showcasing your hard work.

8. Asking for references

When you're applying for new jobs, you'll need references to back you up. If you've been laid off because of external circumstances, you should ask your employer or human resources department whether they can provide you with references. These references can help you obtain new employment by showing potential employers that you left your previous job on good terms despite being laid off.

9. Looking at your resume

Before you look for a job, you need to update your resume. This is true whether you're applying for a job that's in the same field as your previous employment or not. Your resume should include your responsibilities from your employer and your various skills and expertise. If you have data showing the impact of your employment on the companies you've worked for, be sure to include these. Data could include anything from increased productivity to reduced employee rollover. By providing this information, you're showing potential employers that you're an asset.

10. Looking over your cover letter and portfolio

Your cover letter should be updated before you start applying for jobs. If you have a portfolio, this is a good time to update it. Your cover letter and portfolio should include more information than your resume. You should take elements from your resume and expand on them to show potential employers why you're a good fit for the position.

Your cover letter should contain your contact information and the reason you believe you're a good fit for the job. Moreover, you should customize your cover letter for each job posting you're applying to. Include information from the job posting and how your previous employment experience applies to the requirements of the job posting.

11. Looking for a new job

After being laid off, you'll need to look for a new job. Some wait until their severance package has run out, while others may want to apply for a job right away. Remember not to apply to every job you see and, instead, look for jobs that you both qualify for and that satisfy you. You also don't have to apply for a job similar to the one you just left. Some decide to change industries or job titles altogether depending on whether they enjoyed their last employment.

Related: How to Write Career Change Resumes (With Examples and Tips)

12. Asking your network for help

You should also ask your network for help in your job search. You can call your connections or post your interest in a new job on social media. Because you're reaching out for help in your job search, your connections may contact you if they hear about any job positions you qualify for.

Related: What to Do When You Lose Your Job (With Tips and FAQs)


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