At a meeting of the EU Council of Ministers today, UK trade minister Ian McCartney was to argue for changes to the Acquired Rights Directive. These would align it with tough European Court of Justice decisions which undermine the rights of staff to maintain their pay and conditions when council contracts move to a new company or DSO.
Unison head of local government Keith Sonnet made clear that his union's support for best value is now in doubt.
'This proposal is our worst nightmare. If it happens it will call into doubt our support for best value,' Mr Sonnet said.
He said it was too early to say if Unison would take action to oppose the changes.
The proposed move would effectively enshrine in the Directive the controversial Henke and Suzen European Court judgments, which ruled respectively that public sector staff could expect no protection unless an 'economic entity' transferred, and that contract terms could be varied for 'economic, technical or organisational' reasons.
The Suzen decision in particular threw the rules into confusion, prompting some employers to abandon TUPE altogether. This sparked heated rows with unions.
The ensuing turmoil led unions, councils and many contractors to join in a call for a clear UK law when the government issued its consultation paper in December on the Directive.
Observers were mystified as to why the government was taking such a hard line. There was speculation that it was a drive to cut costs.
Stelio Stefanou, chair of the local government procurement panel of the Confederation of British Industry, said the government's proposal 'would be disastrous'.
'The only thing that gives me hope is that I can't believe they would actually do it. I'm quite amazed,' he said.
If TUPE did not apply, all staff could be made redundant each time a contract was let, he said.
Firms which support TUPE fear this could push up contractors' costs, while undermining quality by allowing 'cowboys' to grab contracts by slashing pay and conditions.
Public Contractors Association secretary Cliff Davis-Colman said the change would mean one rule for the public sector and one for the private sector, which was 'wrong and appalling'.
MPO communications manager Martin McGrath said the DTI proposal was 'a grossly insensitive move with no clear logic to it'.
DTI assistant director of employment rights Stephen Walker said the aim was to give clarity and 'reflect the scope of the Directive as interpreted by the European Court'. Without a change to the EU Directive the UK is limited in its ability to legislate, 'but we'd certainly do something'.