FRANKFURT, March 19, 2008 (AFP) - Directors and staff at the German fashion retailer Hugo Boss have reached an agreement that guarantees jobs and German work sites, the private equity group that owns Hugo Boss said Wednesday March 19th.

According to the five-year agreement, the headquarters of Hugo Boss were to remain in Metzingen, southeastern Germany, and the number of workers would not fall below its level at the end of last year, a statement said.

Hugo Boss employed 2,500 workers in Germany at the time.

British private equity group Permira had initially refused to grant such guarantees, and the head of the Hugo Boss workers council, Antonio Simina, welcomed the agreement.

"The works council, the managing board and the majority shareholder Permira enjoy a constructive working relationship and there is consensus on the strategy that the group will be pursuing in the future," Simina said.

Permira, which gained control of Hugo Boss last year via the Italian fashion house Valentino, rankled company directors and staff by demanding a sharp increase in the 2007 share dividend in addition to an additional, one-off dividend.

The payout would total about 450 million euros (700 million dollars).

Analysts had lowered their outlook on shares in the company as a result, estimating that the exceptional dividend could threaten its finances.

Differences with Permira also led to the resignation of the head of Hugo Boss and the president of its supervisory board.

"The proposed dividend payment will not constrain the financial flexibility needed by the company to conclude acquisitions and generate sustained organic growth," chief financial officer Joachim Reinhardt was quoted by the statement as saying.

A Permira representative on the company's supervisory board, Martin Weckwerth, also sought to reassure investors.

"We want to help Hugo Boss become number one worldwide," he said in a separate statement.

"We have a long-term interest in the group's development," he added.