Difference between Layoff and Termination

Key Difference: A layoff is basically when a person has to be let go from their job or position, mainly because the company cannot afford to keep them around. This is due to no fault of the employee, and is often due to economic situations. A termination, on the other hand, is basically when an employee is fired. This could be for a variety of reasons, however, it often gives the impression that it was due to some fault of the employee.

Both layoff and termination basically results in someone losing their job and livelihood. Despite this the terminology of the event can either help or hinder the person from landing another job.

A layoff is basically when a person has to be let go from their job or position, mainly because the company cannot afford to keep them around. This is due to no fault of the employee, and is often due to economic situations when the company has to cut down their staff. This often occurs due to economic instability, recession, if the company is not doing so well financially, or if the company is shutting down a segment or subsidiary.  Still, it is due to no fault of the employee and is out of their hands. In addition to economic reasons, a layoff could also be due to organizational reasons, i.e. reorganization, merger, or takeover that results in the abolition or the merging of positions. Technological innovations might also result in some positions becoming obsolete, hence resulting in layoffs.

A termination, on the other hand, is basically when an employee is fired. This could be for a variety of reasons, however, it often gives the impression that it was due to some fault of the employee. It could be due to the employee violating firm policy, or his inappropriate behavior or simply poor work ethic. In any case, it often sets off bells for a prospective employer warning them to be careful before hiring a terminated employee.

 Additionally, a termination is final; once an employee is terminated there is little or no chance that they will be hired back by the company that terminated them in the first place. However, a layoff may be final or temporary. As the company is only letting the employee go because it must, there is no proof that the company was unhappy with the employee’s work. Hence, it may be possible that once the company is back on secure footing, and needs to hire employees, that they will hire back the employee who was good at his job and familiar with company and its policies, but one that they had to let go of.

Comparison between Layoff and Termination:

 

Layoff

Termination

Type

Dismissal from employment

Dismissal from employment

Description

When a company has to let go of their employees because they are downsizing their employee force, or is going out of business.

Also known as fired. When an employee has to be fired because they were not right for the job or they were not performing.

Reasons

  • Economic reasons
  • Recession
  • Decreased turnover
  • Shutting down a segment or subsidiary
  • Outsourcing
  • Reorganization, merger, or takeover
  • Technological innovations
  • Lack of performance
  • Lack of productivity
  • Confrontations with management or co-workers
  • Creating a hostile work environment
  • Committing a criminal act such as fraud or theft

Chances of rehire

Modest to Good, as long as the company is in a place to re-hire

Little to none

Impact on getting a new job

None or minimal impact, as it wasn’t the employee’s fault.

Negative, as it was likely that the employee was fired due to some fault of their own.

Image Courtesy: fwweekly.com, referenceforbusiness.com

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