Tayside Contracts is the commercial trading arm of the councils of Angus, Dundee City and Perth & Kinross and employs approximately 2500 people.

Around 380 employees in Dundee City Council’s construction and house maintenance departments would see their contracts taken over by the firm.

The council claims the restructuring proposal would “safeguard jobs and ensure opportunities for apprentices” but a trade union boss warned that jobs could be at risk.

Councillors on the policy and resources committee are being asked to take the first steps by establishing a steering group to take the proposal forward.

Councillor Ken Guild, convener of the policy & resources committee, said: “The council has been reviewing its construction services with a view to safeguarding jobs and ensuring opportunities for apprentices.

“The proposals that are coming forward follow a thorough exploration of methods which could grow the business sustainably in the future, and would provide opportunities to diversify across new markets and areas.

“If the report is approved, this would only be the start of the process and employees and trade unions would be closely involved in the development of the new model.

“They will be kept up to date with progress as we want to do this in an open and transparent way.

“I think this a sensible and forward-thinking solution which looks to the future of the construction service.”

A report to the committee explains that a review of the service was undertaken as part of the council’s Changing for the Future programme which seeks to ensure that the council can deliver best value in a challenging financial environment by re-shaping services and managing assets.

An option appraisal, which included consultation with stakeholders, concluded that the transfer of construction services to Tayside Contracts would provide longer term sustainability of the service to give better job security for the workforce than the other options considered.

In line with similar transfers of services from the council in the past, there would also be opportunities to reduce overall operating costs and produce efficiencies and savings without detriment to service delivery.

However, Steve Dillon, Scottish Secretary for the Union of Construction, Allied Trades and Technicians (UCATT), which represents about 200 staff members, said the union’s “default position” was to oppose a move, and voiced fears that workers’ conditions could be affected.

He said: “Negotiations are very much on the table at this point. We will fight for the outcome that our members in Dundee want.

“We are against any outsourcing of staff members from any local authority to an outside body. That is our national trade union policy. We would always rather bring staff in-house than outsource them. Outsourcing has the risk of job losses, down-sizing and diminished working conditions.

“There’s a consultation period now required, with our members, who will decide how they want to vote. However, it is up to our members how they decide to vote. Regardless, we will back them to the hilt.”

The committee report explains that the aim is to make the transfer by late 2017.

If the recommendations are approved, a steering group would be formed led by the executive directors of neighbourhood services and city development.