What happens when failed entrepreneurs become unemployed

The voluntary unemployment insurance for the self-employed

Those who start their own business often have an uneasy feeling at first about being without the well-known social safety nets in entrepreneurial life. What to do if self-employment doesn't work out? What if the orders don't come in as planned? Unemployment is a topic that preoccupies founders and there is indeed a back door: voluntary unemployment insurance. This article explains who is entitled, how high the contribution rates are and what payments those affected can expect.

Not everyone is entitled: Requirements for voluntary unemployment insurance

Not every entrepreneur has a right to join voluntary unemployment insurance. It is particularly important that the application for continued insurance within the first three months after starting self-employment is provided. In addition, apply following criteria:

  • You must have been compulsorily insured for at least twelve months in the previous two years. This is the case if you worked as an employee or received insurable sickness benefit or childcare allowance. It doesn't matter whether the insurance has consistently passed. It is only important that contributions have been paid for a total of one year.
  • If you started out of unemployment, the requirement is considered fulfilled. However, you must also apply for voluntary unemployment insurance at the employment agency within the first three months of starting your own business.
  • Self-employment must take up at least 15 hours a week

What benefits can be expected in the event of unemployment?

The amount of the benefit is in regardless of previous profits and will based on the training of the self-employed. University or technical college graduates receive higher compensation than self-employed people without prior training. The professional qualifications are regulated in the Social Security Code.

  • Academics: 102.20 euros / day (west)
  • Technician and master: 85.17 euros / day (west)
  • Skilled workers: 68.13 euros / day (west)
  • Unskilled: 51.10 euros / day (West)

In the case of unemployment benefits, the social security contributions are to be calculated at a flat rate of 21 percent. In addition, the income tax must be deducted according to the income tax card.

The duration of the benefit payment depends on your age. People under 55 years of age are entitled to ALG I for six to twelve months, those over 55 years of age are entitled to between six and 24 months.

How much is the monthly fee?

The amount of the contribution depends on the reference value, which is determined by the legislator and which is different in the old and new federal states.

In the new federal states the reference figure for 2017 is 2,660 euros, in the old states it is 2,075 euros. The contribution rate is three percent, which means that in the new federal states a monthly contribution of 79.80 euros has to be paid. As a self-employed person, you can take advantage of a discount for the first two years and only have to pay half of the contribution.

What should I watch out for in the event of unemployment?

As a self-employed person, the fear of unemployment usually plays a central role. The voluntary unemployment insurance partially takes this pressure off you and offers a certain security in an emergency. In most cases, however, the insurance benefits are insufficient, meaning that you can only bridge the gap for a limited time.

If you apply for ALG I, you will also be available again on the job market. The employment office sees you as looking for a job, tries to place you and expects you to look for a new job. In addition, the office has the right to refer you to a reasonable position. If you do not accept this, you must expect a reduction in benefits.

Does voluntary unemployment insurance make sense for me?

Basically, it is not possible to say in general whether the protection makes sense for you. Self-employed people who have not completed any training, in particular, have to reckon with very low performance, which is barely sufficient to survive. For university graduates, voluntary unemployment insurance can be useful insofar as they can expect a significantly higher performance and have to pay a relatively low contribution. Whether you are an academic or an unskilled person, one way or another you should always build up an appropriate reserve so that you can fall back on it in an emergency. Even if the benefits of ALG I are sufficient for you until you have found a new job, you must expect a certain processing time on the part of the office. The accumulation of assets helps you to bridge this period and can later be used for old-age provision in addition to your pension.

The amount of the expected unemployment benefit

If a self-employed person fails and registers as unemployed, the employment agency uses a fictitious remuneration as a basis. So it doesn't matter how much the self-employed actually earned. Rather, the amount of unemployment benefit depends on the job for which the employment agency places the failed self-employed. Another important factor is which qualifications are required for the desired activity.

Practical examples for the amount of unemployment benefit

Assuming that the person concerned is married and classified in tax class III (without child allowance). Then he can count on these references:

  • If the placement efforts are aimed at a job for which no training is required, he can expect around € 815 in the old federal states and € 705 in the new federal states.
  • If he is to be placed in a position that requires completed vocational training, he can expect unemployment benefits of around € 1050 (old federal states). In the new federal states, the expected unemployment benefit is around € 935 per month.
  • Similarly, a withdrawal of € 1,250 (west) or € 1,120 (east) applies to master craftsmen's positions.
  • For positions that require a university degree, € 1,440 (West) and € 1,290 (East).

By the way: It is not only possible to register at the employment office if you are completely unemployed. Even if the activity has to be restricted, the self-employed can claim their unemployment benefit on a pro-rata basis.

Apply to the local employment agency

The application must be submitted to the employment agency at your place of residence. In the course of the application, self-employed persons must prove at what point in time they founded the company. To do this, they submit, for example, a business registration or a certificate from the tax advisor. Applications are available online and offline.


How can I cancel the voluntary unemployment insurance?

The legal rule is that when you join voluntary unemployment insurance, you are required to be insured for at least five years. Before that, the self-employed cannot terminate or resign from their contract. However, the insurance expires if a member is in arrears for more than three months.