Chris Fogarty reports

A small Merseyside council has found itself embroiled in a legal argument over TUPE after its bid to alter the pay and conditions of workers at a secure unit for dangerous teenagers was blocked.

St Helens Borough Council is appealing an Employment Appeal Tribunal ruling that strictly applied the European Union Transfer of Undertakings (Protection of Employment) Regulations (TUPE) directive governing the rights of employers to alter wages and conditions after taking over a business or an agreed contract.

Critics of the ruling say it means purchasers are effectively stuck with contractual terms even if staff changes are essential for the survival of the a business.

The rationale employed by the tribunal was that employees transferred from one organisation to another often have minimal negotiating powers.

The ruling by the tribunal's president, now Lord Honourable Justice Mummery, came after St Helens Council took over the running of the unit from Lancashire County Council and attempted to change existing conditions.

St Helens says the unit, Redbank, was losing money and changes had to be made.

St Helens solicitor Peter Blackburn said the result of the appeal would have wide ramifications. "The major problem is that the ruling will put new employers off. In this field it is the case of the moment because everyone is waiting for the result, to see if the Court of Appeal will overturn it."

Blackburn said the appeal, to be held in May, would be an important decision with regard to the controversial TUPE directive. "It's a struggle between European law and English law," he added.

The position over TUPE has been further clouded by a recent European Court decision stating that the transfer of administrative functions between public authorities is not covered by the TUPE directive.

Opinion among local government solicitors is divided as to whether the decision will affect the St Helens appeal.