Termination vs. Layoff

Termination vs. Layoff: What’s the Difference?

Both layoffs and termination are terms used to imply an end of employment. A layoff occurs when business developments or adjustments affect a company’s ability to retain some employment positions. As a result, some employees may unexpectedly lose their jobs temporarily or permanently.

On the other hand, termination involves a permanent loss of employment caused by an employee’s performance issues, lateness at work, and unprofessionalism. Here’s a detailed guide on termination vs. layoff: what is the difference between the two? How do they affect your job search?

What’s the Meaning of Termination?

Termination means the end of employment caused by performance problems or work ethic issues. For instance, an employer may terminate a worker who strains to represent the organization professionally. In case of termination, you won’t receive any tax credit or deduction. Learn more about severance compensation taxes.

Here are the most common reasons for termination:

Low-Quality Work

Organizations often set specific productivity goals or objectives for projects. Critical projects require dedicated employees who are ready to get the job done without costly delays.

Regardless of the industry, every business depends on the employees’ performance to succeed. Managers and companies can easily accomplish their productivity goals with an efficient and productive team. Employees who fail to meet the goals of the company may get terminated for low performance.

Getting to Work Late

A company’s productivity depends on the timely arrival of all employees. Every worker plays a role in aiding the company maintain high productivity levels.

Arriving to the workplace on time is one of the easiest ways to keep your job. Doing so demonstrates to managers, coworkers, and other staff members that you are a reliable individual to the team and can meet your work duties.

A punctual employee can help maintain a healthy level of office morale, whereas late workers do the opposite. Although it’s rare to get fired for getting late to work, regular lateness could lead to termination.

Stealing Organizational Time or Resources

A worker who uses business tools and resources for their benefit or falsifies a timesheet is typically stealing from the organization. Your employer may not mind if you use the printer to generate several copies for your garage sale poster this weekend. However, always limit all usage of a company’s property or resources.

If employees use the business’ resources excessively, the supply costs may increase. This may result in increased costs and reduced profits, impacting the overall performance of the company. Employees that misuse a firm’s resources may get terminated.


Having an open chat with a manager about your duties can be all right but never refuse to do whatever they have asked of you. Every workplace requires employees to follow a manager’s rational requests and finish the given tasks without issues. If you fail to follow your manager’s rules and expectations, the employer may fire you for insubordination.

Poor Representation of the Business

You have all the freedom to spend your out-of-work hours as you like. However, you need to take caution not to display yourself in a manner that may affect your employer’s brand reputation. Even when interacting on social media, ensure you always depict high levels of professionalism, especially when mentioning the company in online posts. Failure to do so could lead to termination.

What does Layoff Mean?

Layoff refers to the end of employment caused by factors not relating to the employee. For example, a company may lay off its workers after amalgamation with another company. Here are the common reasons for layoffs:


A business may outsource duties or projects for different reasons, including:

  • To gain access to experts in its industry
  • To improve efficiencies among in-house staff
  • To save on production costs

Merger or Acquisition

A merger or acquisition occurs when two businesses combine their efforts to operate as a single entity. In such cases, staff redundancies may occur, resulting in the layoff of employees from certain positions.

Company Downsizing

Businesses will downsize due to a lack of funds to keep operating. They may attempt to recover money by removing non-crucial positions, affecting some employees. Downsizing is a strategy that can help a business generate high profits and stay operational.

Entity Relocation

A business may shift to a specific geographical location for several reasons:

  • To be closer to its target market
  • Gain more access to specialists in the industry
  • Reduce operational costs
  • Enjoy an improved quality of life due to better education, reduced costs of living, and fascinating recreational activities

When an entity relocates, it may lay off current workers who are unwilling to move or choose to start over with new staff.

What Are the Differences Between Layoff vs. Termination?

The main difference between layoff vs. termination lies in their meanings. A layoff occurs when an employee loses their job due to the company’s inability to retain them. It’s not the employee’s fault and often occurs due to business closure or changes in economic situations.

On the other hand, termination occurs when employees get fired for their mistakes. It could be due to various reasons for instance, the employees violating the company’s policies, showing inappropriate behavior, or performing poorly.

With layoffs, the chances of getting a new job are very high because the reason for the end of employment has nothing to do with the employees’ performance or behavior. Being unemployed can be temporary or permanent because there’s no evidence that the employer was unhappy. The company may even hire back such employees if it needs new workers.

In contrast, a terminated employee will find it challenging to find a new job. This is because a termination usually warns a potential employer to be careful of such employees. Once you get terminated, it’s final as your chances of getting hired are lower.

How Can Termination Affect Your Job Search?

Termination greatly affects your approach to job search as you must account for it. For instance, you need to explain the reason(s) for termination as you search for jobs.

It can potentially scare away prospective employers, showing your poor performance, unprofessionalism, undesirable behaviors, and more. The chances of getting hired after termination are little to none.

Below are a few things you should remember when looking for a job after termination:

  • Understand the reason for your termination
  • Look for a job that fits your expertise level
  • Practice how to describe or explain your situation during a job interview
  • Reach out to your network for referral

How Can Layoffs Affect Your Job Search?

Layoffs may come when you least expect them. Unlike termination, layoffs may not greatly affect your job hunt, as you were not at fault. Your chances of getting hired are pretty high. Besides, the company may rehire you in case of new employment opportunities.

Below are some tips to help you in your next job search after a layoff:

  • Apply for unemployment to continue receiving funds
  • Stay positive, as layoffs have nothing to do with your performance
  • Try freelance jobs to keep your skills active
  • Attend networking events to get connections or ideas of where to find employment
  • Explain the reason for layoff in your cover letter

That said, what’s the difference between termination vs. layoff? Both terms involve dismissal from employment but for various reasons. A layoff is primarily caused by a company’s inability to retain employees due to lack of funds, downsizing employee force, economic reasons, merging, and outsourcing. The chances of getting rehired after a layoff are good.

On the other hand, termination occurs due to an employee’s fault. It could be due to poor performance, arriving at the workplace late, and representing the company unprofessionally. The chances of getting rehired after a termination are little to none.