Senior managers' organisations have called for action to prevent 'hundreds' of contractual disputes as the next round of NHS reforms gathers pace.

The First Division Association and the Institute of Health Services Management said this week that they were seeing a 'growing number' of trusts refusing to honour individual contracts amid white paper restructuring.

The FDA is particularly concerned about cases - some of which involve hundreds of thousands of pounds - in which trusts claim contract terms are 'ultra vires'.

'The 1990 NHS act seems to give trusts pretty wide powers to draw up contracts, so since 1990 most people employed on trust contacts have assumed they were fine, ' said FDA health spokesperson Jon Restell. 'Now some trusts are arguing they did not have the power to make certain terms, often for political reasons - to avoid large payoffs.'

Recent cases dealt with by the FDA include:

A trust chief executive on£55,000 'forced out' by the board and told his 12 months' notice clause was invalid. The trust tried to pay six months and no other entitlements, then backed down.

A chief executive in South Thames who got compensation for loss of contract after a merger. His ex-employer is now claiming the£200,000 payment was ultra vires and seeking recovery.

The FDA believes the problem can open spiral as a result of mergers and and white paper re-organisation. It is urging the NHS Executive to take action and clarify trusts' powers. And it wants the NHSE to adopt 'a more corporate approach' to advising and redeploying senior executives affected by structural change.

'Otherwise. . . people will be left to scramble for jobs or they will fall out of the NHS altogether, ' Mr Restell warned.

The FDA dealt with more than 120 contractual disputes last year, of which 90 per cent involved terms and conditions.

The IHSM says its legal helpline takes about 60 calls a month, of which 75 per cent relate to contracts, terms and conditions.

IHSM deputy director Suzanne Tyler said: 'What must be challenged is the failure to deal with people decently and fairly.'

Ongoing cases highlighted by the IHSM include:

A trust chief executive who was told he would not get the top job in a merged trust, but was promised a 'sideways move'. The promised position did not materialise - then he was told he was not eligible for redundancy because he had not applied for the chief executive's job.

A nursing manager with 30 years' experience, whose department was reviewed while he recovered from an operation. The trust tried to remove him on the grounds of poor performance, instead of instituting redundancy proceedings.

An NHS Executive statement said it would give 'full consideration to the issues raised' if it was formally approached about them. It said trusts and HAs were able to set their own terms and conditions, although health secretary Frank Dobson had written to chairs in January asking them to try to peg senior managers' pay rises at 2.7 per cent this year.

'That letter just muddied the waters, ' said Mr Restell. 'It seems we can have action across the NHS on something like pay, but not these issues.'