Unemployment benefits

Types of unemployment benefits

There are two types of unemployment benefits in Germany. Unemployment insurance (UI) benefits are paid only for a limited period. The potential length of UI receipt depends positively on the work-history in insured employment in the seven years prior to a benefit claim. It also increases with the age of an unemployed person. Workers who are younger than 42 years can receive UI benefits for no longer than 12 months. When people run out of UI benefit, they may receive unemployment assistance (UA) benefits, provided that they pass a means-test. There is no time-limit for UA benefit receipt and the formal replacement rates of UA are somewhat lower than those of UI benefit.

To be eligible for UI benefits people need to have worked at least 12 months in contributory employment in the previous three years prior to the benefit claim.

The claimant must not have reached the retirement age of 65 years and has to be available for a suitable job or a training course offered by the local labour offices. He/she also has to be available on short notice to the labour office. Of course, the claimant has to register as unemployed at the local labour office.

In the first four months of unemployment the labour offices regarded as a suitable job only those jobs with the same occupational qualification as in the previous job. Thereafter a job with a lower qualification could be regarded as suitable.

Not accepting a suitable job offer once may lead to a temporary loss of the UI entitlement for 12 weeks. A complete loss of the UI receipt is possible if the recipient refuses suitable job offers repeatedly.

In the first three months of unemployment a job was defined as suitable if it paid at least 80% of the previous wage of the UI benefit recipient. This percentage declines to 70% in the forth month unemployment. After the sixth month of UI benefit receipt any job with a wage that exceeds the UI benefit is regarded as suitable. A suitable job is also defined by the time needed to travel to work.

A job with a travel to work time of three or less hours a day is classified as suitable.

The level of the UI benefits is defined relative to the net earnings in the previous job.

The formal replacement rates are 67% for parents and 60% for childless people. There is an upper cap to the benefit level, which depends on the upper threshold for gross earnings up to which contributions to the social insurance system have to be paid.

Time in employment (months) - duration of entitlement (months):

12-15 - 6
16-19 - 8
20-23 - 10
24-27 - 12
28-31 - 14 age >= 45 years
32-35 - 16 age >= 45
36-39 - 18 age >= 45
40-43 - 20 age >= 47
44-47 - 22 age >= 47
48-53 - 24 age >= 52
54-55 - 26 age >= 52
56-59 - 28 age >= 57
60-63 - 30 age >= 57
>=64 - 32 age >= 57
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