The coalition government has scrapped plans to reform controversial employment regulations in an apparent U-turn by the Conservatives, it has emerged.

Mark Hammerton, employment partner at national firm Eversheds, said Lord Hunt, now energy minister, had suggested before the election that a Conservative government would seek to ‘rein in’ aspects of the Transfer of Undertakings (Protection of Employment) Regulations 2006 which cover service provision changes.

Under the regulations, law firms or other companies that win contracts from rival firms can be obliged to take on employees from the competitor firm, or pay them compensation if they are made redundant because their employer lost the contract.

Hammerton said Hunt had suggested before the election that the UK regulations may exceed what is required under EU law. However, Ed Davey, minister at the Department for Business, Innovation and Skills (BIS), told parliament this month that the government has no plans to revise the TUPE regulations.

Hammerton said: ‘Employers will be disappointed that there are no planned changes to the TUPE regulations. The initial intention of the legislation was not to protect service provision changes, such as one law firm winning a contract from another in an open tender. It was intended for when a business is sold or otherwise acquired in its entirety. A review of the regulations is needed to add clarity to an increasingly fragmented piece of legislation.’

Gordon Turner, founding partner of London firm Partners Employment Lawyers, said: ‘We are glad TUPE has been retained, but the government has missed an opportunity to fine tune it. There is an element of "blind date" in a process that permits employees from one company to be herded across into an alien culture at another company. The regulations purport to do good by employees, but there is an argument they would be better served by being made redundant and getting on with their lives.’

A BIS spokesman confirmed that the government had ‘no current plans’ to amend TUPE regulations.