The Tupe (transfer of undertaking and protection of employment) regulations implemented in Britain have been blamed for deterring potential private sector bidders for services put out to tender by local and central government.
The European Union has agreed to subject Tupe to a subsidiarity test, with a view to simplifying the complicated rules.
John Hall, director-general of contractors lobby group the Business Services Association, complained about the Ministry of Defence's requirements that contractors have to guarantee not to change conditions of employment or sack employees for 15 months.
Meanwhile the government actuary's department has confirmed that contractors bidding for National Health Service work will have to provide a 'broadly equivalent' pension for employees. A recent industrial tribunal ruling cast doubt on whether pensions were covered by the Tupe rules.