This is a fairly common interview question and oh, by the way, it is also on every job application too. Sometimes, the reason employers ask this question is to see how and what your response will be, not so much the words you use, but the emotions you connect with the experience. Sounds kind of "heady" I know, let's keep it simple.
Candidate A was part of a company wide downsizing. When asked in the interview why they left, Candidate A goes on and on. They blame bad strategy and the history leading up to the company's decision to layoff employees. But wait, Candidate A goes on further and talks about how no matter how hard they worked they could never please their immediate supervisor. Wait, there is still more. Candidate A confesses that some of their technical skills and industry knowledge might not have been so up to date. Yikes. Too much information.
What the interviewer hears are all sorts of reasons NOT to bring Candidate A in for another interview. There is emotional baggage not to mention a deficiency in skills.
Candidate B was part of a company wide downsizing too. Their answer to the question went something like this.
"XYZ company had unfortunately lost some of their key accounts and as a result had to eliminate positions. All but two people in my department were let go."
Candidate B didn't shoot them-self in the foot by providing too much information. They stated the facts.
Answering this question requires some rehearsing. Your first attempt will most likely not be the best. Try to craft your answer on paper. Bullet point the key point(s) you want to make. There is a fine line between sounding rote and sounding confident.
Additionally, the answer you provide should sound null of emotion or perhaps empathetic. Never, ever blame anyone during the interview. Sure, companies make bad choices, but there is no value in pointing out flaws, errors, problems, or "issues". Negative, emotionally-charged answers will always work against the candidate.
If you have emotional baggage connected to the "unfair or unjust" termination, then you might need to work on that first because it WILL come out during the interview.
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