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Involuntary Termination: What Does It Actually Mean?

September 11, 2018 by Josh Hrala

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When comes to involuntary termination and voluntary termination, things can get a bit muddy, especially because we tend to use incorrect definitions when talking about terminations in everyday language.

But, despite this, there is a huge difference between voluntary and involuntary termination, meaning that the workers being let go – under either circumstance – need to know where they stand.

To help clarify these differences, we’ve decided to dig into what both mean on paper and how the differences impact future employment and benefits packages.

Let’s get started.

The Difference Between Voluntary and Involuntary Termination

While the difference seems obvious – a voluntary termination is when someone leaves on their own accord and an involuntary termination is when someone has no choice in the matter – things get muddled during layoffs and firings.
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So, let’s go back to basics. What is a voluntary termination?

In short, a voluntary termination is when someone makes a choice that directly impacts their employment at an organization. This means that the person can choose to leave and take up a new role elsewhere, retire from the organization, or take up a voluntary layoff offer.

But what about being fired?

According to most organizations, a firing is a voluntary termination.


Because the worker has performed a direct action that has led them to being terminated. The employee has either broken a rule, under-performed, or has done something else that has prompted the organization to let them go.

When a person is fired they are let go not because of a business decision but because of an action, making it a clear voluntary act despite the fact that no one ever wants to get fired.

An involuntary termination is when an employee is let go because of a business decision that is outside of their control. For example, the business could be experiencing a financial hardship, which prompts them to hold a layoff event.

Those let go in the layoff didn’t directly do anything that caused their loss of employment, meaning that they had no control over the situation.

Layoffs and Firings: Do Not Confuse the Two

Now, in our everyday language, some workers who were involuntarily terminated due to a layoff may say that they were “fired,” but this is not the case.

On the other hand, those who have been fired may say that they were laid off, which also isn’t true.

The reason why this matters is because a person who was fired may have a harder time finding a new role because their next employer will wonder if they will follow the rules at their organization, too. Also, if someone lies and says that they were laid off when they were really fired, a employer – who will likely check references – will figure out this lie and be even less likely to hire that person.

The same can be true is a laid off worker tells a new employer that they were fired when they really weren’t. In this case, the person is making their own life harder for no reason.

So, in other words, workers need to be clear about what happened at their previous employer so that they act accordingly during their next job interview.

Sometimes People Are Fired Like a Layoff

That heading doesn’t make a lot of sense when you first read it. However, sometimes, in order to help their exiting worker, organizations will give workers the choice to either take a layoff offer or be fired.

This generally happens when the person being let go is rather high up the corporate food chain, but can also occur with lower level workers, too. At the end of the day, it depends on the employer.

By allowing employees to take a voluntary layoff package, the company can provide severance and outplacement services (which we’ll get into in a little bit), allowing the company to easily offboard a poor worker without all the tension and headaches that can come with firings.
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Involuntary Termination Benefits

One of the biggest differences between the two types of terminations is how benefits are handled.

For example, an involuntary termination often comes with perks for the worker, such as a severance agreement and outplacement services.

A severance agreement explains the terms and conditions of the termination and offers the employee a sum of money in exchange for them to a sign the agreement and agree that they will not sue the company.

Severance agreements help both parties by providing the exiting employee with a big of cash to navigate their job hunt while also making sure that the company doesn’t end up in a court, meaning that a proper, well-crafted severance agreement should be a win-win.

Outplacement is a service provided to the outgoing staff member that helps them get back to work in a new role faster than going it alone. By using job coaches, online tools, and state-of-the-art techniques, outplacement providers can take a lot of the stress out of layoffs, which in turn help the company rebound and keep their reputation in tact.

You can learn all about outplacement here.

As you can see, involuntary terminations come, usually, with a support system because no one likes going through the layoff process. Plus, employees may also be eligible for unemployment benefits, though this largely depends on how the layoff happened and a bunch of other issues.

But what about voluntary terminations?

Voluntary Termination Benefits

When someone voluntarily steps down at a company, benefits are typically not extended.

And this makes a lot of sense. For example, if a person leaves the organization by putting in their two-week notice and then leaving, they aren’t going to get a severance agreement or outplacement package because they are most likely leaving for a new role (or some other reason) and the company doesn’t have to protect itself.

The same can be said for retirements and things of that nature. Most of the time, these individuals have something else lined up and are leaving to pursue those goals.

But here’s the bad news: this is also true for firings.

If someone is fired, they have more than likely broken a company policy. This voluntary act means that the company can terminated their employment without all of the baggage that comes with layoffs.

The only time this is different is if the person takes up a voluntary layoff package because that means that the employee is willingly stepping down to help the business with an issue it is having. For many, a voluntary layoff is attractive because of the severance and outplacement offered.

For example, if a worker was already thinking about leaving but doesn’t know where they want to go next, a voluntary layoff package can help them make the move.

Voluntary layoffs are, traditionally, one of the only forms of voluntary termination that come with a slew of different perks.

Voluntary and Involuntary Termination: The Takeaways

When it comes to voluntary and involuntary termination, everyone needs to know the difference and everyone needs to make sure that they are trying their best to use the correct terms on a daily basis so workers are not confused.

There are many differences between the two types of terminations and understanding them can make the processes involved in both work to the best of their ability.

Want to learn more about terminations? Download our checklist:

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Josh Hrala

Josh Hrala

Josh is an HR journalist and ghostwriter who's been covering outplacement and offboarding for over six years. Before pivoting to the HR world, he was a science journalist whose work can be found in Popular Science, ScienceAlert, The Huffington Post, Cracked, Modern Notion, and more.

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