Trusts involved in private finance initiative-funded projects may remove facilities management from re-drawn bids in order to circumvent the 'legal quagmire' around employment of public sector staff, it emerged this week.

The possibility that the three pilot PFI projects working through the issue of staff transfers might remove staff employment from contracts altogether came against the background of disagreement over privatisation at this week's TUC congress.

Stoke Mandeville Hospital trust, Barking, Havering and Redbridge Hospitals trust and South West London Community trust are awaiting government advice on whether the proposed transfer of staff to private sector consortia would be legal. The PFI bidding process remains suspended until the issue has been resolved.

Although those involved in the process have made it clear the private companies are in for the long haul, it seems likely that those members of the consortia involved in the provision of socalled soft services may be squeezed out as the unions sense they are winning the arguments.

Michael Davis, chief executive of Catalyst, which is a preferred bidder for all three projects, told HSJ that there were serious legal problems with the government's secondment model that could leave it open to legal challenges for breaching European law.

This would not be overcome by introducing new legislation in the UK.

He said: 'We are being advised that the proposed model is not legal. Trusts may not have the powers to transfer the workforce for 30 years, and our advice is that the proposed secondment model is TUPE [transfer of undertakings protection of employment] anyway.

'It would be tragic if the three pilot projects are held up. The worst case for the projects would be if trusts decided not to include soft services. It would be less attractive in the long term.

'Secondment is a legal quagmire. It may be we have to have indemnities against action by Europe.'

Barking, Havering and Redbridge Hospitals trust PFI director Duane Passman said: 'We are waiting for the government's law officers to pronounce on that.'

Asked if the trusts might consider removing soft services, he said: 'It has to be an option. I think the soft facilities management providers will not be very happy with that.'

South West London Community trust deputy chief executive Anne Radmore said: 'We need to be clear what the government's view is on what is acceptable.'

In terms of removing soft services, she said: 'I am sure everybody has considered that.'

But she pointed out that if this was done, there might be grounds for some private companies to take legal action for having been excluded from the original bids.

A Department of Health spokesperson said: 'Clearly, there are many technical, legal and management issues under detailed consideration, and negotiations continue. The government is determined to find a solution which ensures that these cooks, cleaners and porters are able to remain as NHS employees.'

Pilot PFI schemes: preferred bidders Stoke Mandeville:£30m replacement of older parts of hospital - Catalyst and Enterprise;

South west London:£25m new community hospital on Roehampton site - Catalyst and Skanska/Innisfree;

Barking, Havering and Redbridge:£150m new district general hospital at Romford - Catalyst and Bouygues.