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                                                Market Conditions Summary - GERMANY
                          LAW                                                                             MARKET PRACTICE

Recruitment and Contract
Probationary Period       3 to 6 months during which notice period is 2 weeks                             3 to 6 months
Probationary Period
Extension                 Possible within limits
                          4 weeks to the 15th or end of a month. After 2 years of service after age 25,
                          the legal notice periods are increased, as follows:
                          + 2 years: 1 month + 5 years: 2 months                                          Common practice for general staff is to follow the legal
                          + 8 years: 3 months +10 years: 4 months                                         minimum requirements. Common practice for key personnel,
                          +12 years: 5 months+15 years: 6 months,                                         executives, and management is a notice period of 3 to 6
Notice Period             +20 years: 7 months (each to the end of a month).                               months to the end of a calendar quarter.
Notice Period 2
Notice Period 3
Notice Period 4
Fixed Term Contract
Indefinite Contract
                                                                                                          Age 65 for both sexes. Employees can elect to carry on
Retirement Age            Age 65                                                                          working to 67 with a corresponding rise in pension.

Employment Conditions

                                                                                                          Most industries adopt a 36 to 38-hour week for general staff
                                                                                                          (basis: 5-day week). For executives a 40 hour-week is more
                          Maximum 48 hours per week, based on a working week from Monday to               common, although the actual working time generally exceeds
Working Hours             Saturday                                                                        40 hours.
Vacation                  24 working days based on a 6-day working week (4 weeks vacation)                30 working days based on a 5-day working week
Special Leave             No legal directive                                                              At least a day for each event would be normal
Birth of Child
Death of Spouse or child
Death of Father or Mother
Marriage of a child
                          Statutory holidays: 10 - 12 days depending on state/region the company is
                          located in. Statutory Public Holidays in all states/regions: New Years' Day,
                          Good Friday, Easter Monday, Labour Day, Whit Monday, Ascension Day, Day         Follow statutory practicewith various state holidays added .e.g.
Public Holidays           of German Reunification, Christmas Day, Boxing Day.                             Corpus Christi/Assumption (Saarland)/Prayer Day (Saxony)
                          6 weeks before and 8 weeks after confinement. The employer is obliged to        Most companies follow staturory practice. The maximum state
                          balance the benefit from the State health insurance fund to 100% of net         contribution is Euro 13 per day so the employer has to
Maternity leave           salary for these 14 weeks                                                       contribute enormously.
                          A mother and/or father is entitled to an unpaid paternity leave of up to 3
                          years. The employment relationship must be continued, The mother/father is
Paternity and Parental    entitled to an allowance paid by the State of Euro 307 per month for 3 years
Leave                     or Euro 460 nper month for 2 years                                              Most companies follow statutory practice.

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                                                Market Conditions Summary - GERMANY
                          LAW                                                                             MARKET PRACTICE

Unpaid leave

                                                                                                          A 13th month payment is common practice for managerial
                                                                                                          employees. Typical practice for general staff is 12 months pay
                                                                                                          plus half month salary in June or July ("vacation pay") and an
                                                                                                          additional month in November ("Christmas bonus"). Practice is
                                                                                                          strongly influenced by trade unions. If no collective bargaining
                                                                                                          agreement is applicable, no requirement to follow this policy
Months of salary                                                                                          and other companies often provide 13 months salary to
payment                                                                                                   general staff too.

Social Coverage
                                                                                                           It is common practice that companies provide further salary
                                                                                                           continuation beyond the legal 6-week period in the form of a
                                                                                                           subsidy to the cash sickness benefit from the State Health
                                                                                                           Fund. The subsidy amounts to the difference between 100% of
                                                                                                           net salary and cash sickness benefit, so that 100% of net
                                                                                                           salary is ensured for a longer period than 6 weeks. This
                                                                                                           subsidy is especially common for executives and managerial
                          It is a legal requirement for the employer to continue 100% salary for the first employees but many companies do also provide it to all
                          6 weeks of incapacity to work due to an accident or illness. The obligation to employees either because it is stipulated in the collective
                          continue full salary payments commences with the first day of sickness.          bargaining agreement, if any, or on a voluntary basis. The
                          Starting with the 7th week a cash sickness benefit becomes payable from the payment term of this subsidy sometimes depends on years of
Payment of salary after   State Health Fund in the amount of 70% of gross salary up to the earnings        service or status of employee (3 to 6 months for general staff,
accident or sickness      ceiling for State Health Fund purposes for a maximum of another 72 weeks. 6 to 12 months for executives)
                                                                                                           Separate life insurance is uncommon in Germany. If death in
                                                                                                           service benefits are provided they are typically provided as
Life insurance                                                                                             part of the retirement benefits plan ("pension plan").
Military Service

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                                                 Market Conditions Summary - GERMANY
                           LAW                                                                             MARKET PRACTICE

                                                                                                            Company pension plans to supplement the benefits under the
                                                                                                            Pension Insurance are quite widespread in Germany. These
                                                                                                            company pension plans typically provide the same benefits as
                                                                                                            the Pension Insurance: old age pensions, early retirement
                                                                                                            pensions, disability pensions, pre-and post retirement
                                                                                                            spouse's pensions, and pre- and post-retirement children's
                                                                                                            pensions. Most company pension plans are non-contributory
                           Total contribution rate: 19.1% of earnings up to a ceiling of Euro 61200 p.a. in for the employees. The implementation of company-financed
                           West Germany and Euro 51000 p.a. in East Germany; contributions are paid pension plans is absolutely voluntary for employers. Effective
                           by employer and employee on a 50:50 basis (9.55% for each). The benefits         01.01.2002 each employee will have a legal right to claim that
                           provided by the German old age pension insurance under Social Security           up to 4% of his/her cash earnings up to the Social Security
                           ("Pension Insurance") provides old age pensions, early retirement pensions, Ceiling are converted into company benefits (employee-
Social Insurance           disability pensions, spouse's pensions, and children's pensions.                 financed plan).
                           Early retirement is possible at age 63 (men) and age 60 (women). These           Early retirement benefits from a company pension plan, if any,
                           different ages will be equalized to age 62 in the next 12 years and a reduction become payable upon receipt of the Socal Security early
Early retirement           for each month of early retirement prior to age 65 is applied.                   retirement pension.

                                                                                                         Typically a company plan would add a small percentage
                                                                                                        contribution up to the social security ceiling seen as
                                                                                                        supplementing the SS income, and a larger one after the
                                                                                                        social security ceiling on the basis that this is the sole
                                                                                                        provision of post retirement income for employee salaries at
                                                                                                        this level. An example could be:                                 --
                                                                                                        ----2.5% of salaries up to the social security limit:
                           The Social Security pension formula results in approximately 40% of final    --------18% of the next E25k on the basis that there is no social
                           average gross earnings up to the earnings ceiling after 45 years of coverage security coverage for this level of income but the employee
                           or 70% of the corresponding net income. A modified pension adjustment        still cannot spare much for his own pension provision ------9%
                           formula to be applied from 2001 on will decrease today's 70% of net income of the next E25k, on the basis that the employee can provide
Pension                    to 64% (67% of re-defined net income)                                        more himself,            --6% thereafter.
                                                                                                        Common market practice with regard to company pension
                                                                                                        plans is still to provide defined benefit plans. However, mainly
                           The Social Security Pension Insurance is a "pay-as-you-go-system". Effective driven by increasing cost and cost control concerns of
Principle of the pension   01.01.2002 the State begins to sponsor the voluntary accumulation of         employers in Germany the trend is towards defined
arrangements               additional funded retirement income by individuals.                          contribution (orientated) plans.

                                                                                                           52 % of small companies have company pension plans in
                                                                                                           addition to the state one.Commonly, a company pension plan,
                           9.55% of salary up to ceiling of Euro 6120000 in West Germany and               if any, is non-contributory for the employee. However, there is
Contributions              Euro51000 in East Germany                                                       a trend to have employees participate in the cost of the plan

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                                                Market Conditions Summary - GERMANY
                          LAW                                                                           MARKET PRACTICE

                                                                                                        The statutory accident insurance only covers accident at work
                                                                                                        or accidents on the way between home and work place.
                                                                                                        Providing an additional accidental death and disability
                                                                                                        insurance is common practice in Germany. Some companies
                        Contributions to the statutory accident insurance (workmen compensation)        cover only exectuives. Multinational companies often cover all
                        are to paid 100% by the employer. Amount of contributions depend on risk        employees. Typically, the insurance arrangements provides
                        involved with the employees' jobs and gross annual payroll. An average          coverage for private and work-related accidents on a 24-hour
Accident Insurance      contribution rate amounts to 1.36% of the gross annual payroll                  basis worldwide.
                        Membership in one of the State Health Funds is mandatory for all employees
                        with earnings up to Euro 45,900 p.a. Employees, who earn more can stay in
                        the Fund on a voluntary basis or may opt out and conclude an individual         Companies do not provide any additional health care benefits.
                        health insurance contract with an insurance company. Contributions to the       They follow statutory practice which is to pay half of the
                        State Health Fund varies depending on the Fund the employee has chosen.         applicable contribution rate (irrespective of whether an
                        The average total contribution rate amounts to 13.9% of earnings up to Euro     employee is mandatorily covered under the State Health Fund,
                        41,400 p.a.. Contributions have to be paid by employer and employee on a        voluntarily covered under the State Health Fund or privately
Health Insurance        50:50 basis (6.95% each).                                                       insured)
                        Total contribution rate: 1.7% of earnings up to a limit of Euro 41,200 p.a.
                        Contributions must be paid by employer and employee on a 50:50 basis
Long Term Care Insurance(0.85% each)                                                                    Companies do not provide additional benefits
                        100% of retirement pension is protected. Until age 55. An occupational          100% of retirement pension is protected. Until age 55. An
Disability Insurance    disability pays 66.7% of a total disability.                                    occupational disability pays 66.7% of a total disability.
                        Between DM 270 per month for 1 child up to DM 350 per child for 4 children
Child Allowance         and more. Child allowances are paid by the State                                Companies do not provide additional benefits
Old age and surviving
dependents insurance,
Disability insurance,
Loss of earnings
Unemployment            3.25% of salary to a limit of Euro 61200 in West Germany and Euro 51000 in      3.25% of salary to a limit of Euro 61200 in West Germany and
insurance (cont)        East Germany                                                                    Euro 45000 in East Germany
Professional and non-
professional accident
Loss of earnings        100% of salary to be paid by law for 6 weeks. Then 70% of earnings ceiling is   Employers offer self insured program supplemening sickness
insurance for sickness  paid from State Health fund                                                     benefit to 100% of income paid for 3 to 12 months
Health Insurance

                                                                                                        To avoid court cases employers sometimes offer severance
                                                                                                        pay upon termination of employment. Amount of severance
                                                                                                        pay depends on individual situation but commonly is in the
Termination Indemnities No legal requirement                                                            range of 0.5 to 1.0 of monthly salary times years of service.

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