Every year a number of employees are dismissed in American companies. Several names have been used to call these circumstances such as dismissal, separation, termination, discharge, firing, or layoff (Paula, 1985). Most people use these words interchangeably even though they are slightly different in the meaning regarding the cause of unemployment. The purpose of this study is to show the distinction between “termination” and “layoff” including the definition, the cause of termination and lay off, and the strategy to handle both the termination and layoff situation more properly and effectively. In addition, the study will demonstrate how the layoff has an impact on the American Corporation.