How to negotiate a contract in Frankfurt

Frankfurt

In Germany, as in France, banks often avoid mentioning specific bonus awards in the employment contract for fear of creating a legal entitlement. Bernd Weller, an employment specialist at Lovells, a law firm in Frankfurt, said: "Once a bonus has been paid for three or more years running, an employee can argue they have a right to it at that level.'

When a bonus is mentioned, German contracts will usually treat it as offered 'freely and willingly' by the employer (read 'discretionary'), that it is not a legal entitlement, and that it may be revoked at any time.

German bankers should also watch out for non-solicitation clauses. These are intended to prevent employees taking colleagues with them when they move to another firm. They may seem perfectly reasonable in view CSFB's attempt to poach as many as 20 equity and fixed income staff from Dresdner Kleinwort Wasserstein's Frankfurt office in July.

However, Weller said it is not uncommon for banks to use non-solicitation clauses that last up to two years. After two years have passed, banks expect working relationships will have deteriorated.

As in other jurisdictions, non-compete clauses present the biggest challenge in the German market. German contracts often include clauses prohibiting employees from working for rivals for up to two years after they leave.

Weller said they are usually geographically and functionally specific: "Employees might be forbidden from doing a similar job in Frankfurt. It is less easy to prevent them from doing that job on Wall Street or in London."

However, as in France, German bankers bound by non-compete clauses can take solace in the fact that they will be compensated. Weller said ex-bankers restricted by non-compete clauses are typically paid half their previous years' pay package, bonus included, for as long as the clause takes effect.

No matter where you work, it is also worth paying attention to translations. Earlier this year, for example, Gregory Weir, an IT specialist at Commerzbank, successfully extracted 12,000 euros ($13,080) from the bank, which had refused to pay him a guaranteed annual bonus of $25,000. The guarantee was mentioned in the English translation of his employment contract, but not in the German version, which he signed.

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