By Tom Käckenhoff and Christoph Steitz

The framework deal, which was also agreed by Innogy's parent RWE and rival E.ON, marks a significant step towards implementing the complex transaction, which will effectively dissolve Innogy as an independently listed group, with RWE and E.ON dividing its assets between them.

Innogy said the deal was a step in the right direction but pointed out that legally binding commitments for certain demands it has made, including keeping the Innogy brand alive, had not been reached.

RWE, which owns 76.8 percent of Innogy after an equity carve out in 2016, agreed in March with rival E.ON to break up Innogy, with E.ON saying it would cut up to 5,000 jobs as part of the transaction.

In the agreement, signed by top executives of all three companies and leaders from labour unions Verdi and IG BCE, the parties said that existing programmes formed a proven basis for cutting jobs in a socially responsible way.

"On this basis, the companies that have signed this agreement essentially rule out compulsory redundancies," the parties said in a joint statement, adding there would be a new collective bargaining deal for workers at Innogy and E.ON to reflect this.

Innogy on Thursday held off supporting a 4.9 billion euro (4.3 billion pound) bid by German rival E.ON that is part of the deal, saying it was not clear if the asset swap was fair for workers or minority shareholders.

(Editing by Caroline Copley and Susan Fenton)

By Tom Käckenhoff and Christoph Steitz