The most financially troubled health trust in Scotland is facing legal action from a former manager who claims he was effectively made redundant when he was passed over for the chief executive's job.

Howard Waldner has raised an action in the Court of Session, arguing that he was sidelined and offered a lesser position when the current Tayside University Hospitals trust chief executive Paul White was appointed two years ago.

The action was posted at the court last week, just after Mr White announced plans to leave Tayside, which is facing a projected£23m cumulative deficit.

Mr Waldner, who left the trust two years ago to take up a senior post in Calgary regional health authority in Canada, had acted as chief executive of Dundee Teaching Hospitals trust in the 18 months before it became part of the new trust. Previously, he had been deputy chief executive under Tim Brett, who had moved to head Tayside health board.

Mr Waldner, however, did not get the job of chief executive of the new trust, which also covers hospitals in Perth and Brechin. At that time, the number of trusts in Scotland was reduced substantially and senior managers had to pass a gruelling interview selection process to win the few remaining top jobs.

Mr Waldner is believed to have been offered another post at the new trust in a different location but he apparently rejected it, saying it was of lower status.

The trust is defending the action, however, saying the post Mr Waldner was offered was equivalent to the one he had previously held.

A spokeswoman for the trust said she could not comment on the case because it was the subject of legal action, but she confirmed that Mr Waldner's name was still on the payroll.

'We were advised by central legal office to keep his name on the payroll for legal reasons but he is not in receipt of any pay, ' she said.

Speaking from Calgary, Mr Waldner told HSJ he could not comment. If Mr Waldner received redundancy pay on the basis of the eight years he served with the NHS in Tayside, he could receive up to£40,000.