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Lambeth London Borough is to appear at an industrial tribunal hearing on 5 July following the loss of more than 400 jobs from its controversial direct labour organisation.

The case is believed to be the first affecting construction workers since the European Court ruled that council workers had to be consulted before their jobs were privatised. It is expected to act as a precedent for thousands of similar claims from former public utility workers.

Town hall bosses union, the Federated Union of Managerial and Professional Officers, is suing Lambeth because it followed a TUPE avoidance scheme and failed to adequately consult its workforce before letting contracts to the private sector, said General Secretary Graham Corless.

The action follows a council move to award only 13 out of more than 60 housing repair contracts to its Operational Services Directorate, the new name for the DLO.

The union claims that Lambeth deliberately made the contracts too small for the DLO to win them.

'Lambeth made its decision to award the contract with the benefit of detailed legal advice and gave full consideration to the TUPE regulations', said a spokesperson, who added that the council retendered the contracts following direct instructions from the Secretary of State for the Environment and 'will vigorously defend itself in court'.

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