In general, unions are powerful and large in Germany. Workers are protected by strong labour laws that provide them many different rights. Ordinary dismissal of workers must be preceded by notice, which depends on the duration of the time the employee was with the company. It may vary from 1-7 months. The employee may also challenge the dismissal in court.

To protect for this eventuality however, there is unemployment insurance in place. This is mandatory for all employees in Germany. Contributions are generally equally split between employer and employee and amount to about 6.5% of gross monthly salary.

Unemployment benefits are paid if you are unemployed and have worked (and paid contributions) for at least 12 months in the last three years (note that this period will be shortened to two years). To receive unemployment benefits, you must register at your local employment office (Arbeitsamt). Benefits are around 60% of your previous net salary and if you have children, this percentage rises to around 67%. The length of time you will receive benefits depends on the length of former employment and your age. Benefits are restricted to one year for people up to 45 years.

While receiving payment, you are required to show that you are looking out for a new job. In recent years, unemployment benefits are becoming harder to claim.

Sources:

1. http://www.justlanded.com/english/Germany/Tools/
2. http://www.buyusa.gov/germany/en/practices.html