Unemployment insurance is the branch of statutory social security that insures employees against the risk of unemployment . The primary purpose of unemployment insurance is the prevention of loss, and only secondarily does it include protection against loss in the form of payments ( unemployment benefit ). It therefore provides not only insurance payments but also funding for job creation and protection and, in the context of employment promotion, funding for fostering vocational training, entry into active employment and occupational rehabilitation. The provision of unemployment assistance is not an unemployment insurance matter.

Despite its primarily preventive function, the main form of provision paid out from unemployment insurance constitutes payments to ensure the means of existence for employees during periods of unemployment. For this, people employed in jobs subject to statutory social security contributions are entitled (usually after a specified qualifying period has been completed) to claim payments which are neither dependent on the unemployed individual's degree of need nor liable to be reduced when other forms of income are taken into account. Unemployment insurance is administered by the Federal Employment Service .

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.