UNION leaders have refused to sign the industrial relations agreement for the 2012 Olympics following a row over direct employment levels on the job.
The move has stunned members of the Olympic delivery partner CLM who have attacked the union stance as 'madness'.
Executives from the main construction unions are demanding that the agreement contains a commitment to '100 per cent direct employment' across the site.
But bosses at the Laing O'Rourke-led CLM said they cannot make that cast-iron pledge.
A source close to the talks said: 'CLM has made a clear commitment to direct employment but it cannot give a 100 per cent promise because for some trades it is impractical.
'CLM is saying that where it is reasonably practical people should be on PAYE.
Its code of practice says that if that is not possible then contractors must have written permission from CLM and have to give reasons for having self employed people on the Olympics.
'That is a commitment to direct employment in my book. It will be difficult for firms to tell O'Rourke they can't find direct labour when they have thousands of people on their books.'
But the unions are not convinced by the pledge and are vowing not to sign the agreement.
One union source said: 'All the unions agree that employment status is not negotiable and at this stage we have no agreement.
'They seem to have lost sight of the fact that the Olympics is being built with public funds, and taxpayers are not going to stand for tax avoidance being endorsed during construction work for the 2012 games.'
Union leaders are pushing for a 'T5 plus' industrial relations package on the Olympics which will offer even better terms than the current deal at Heathrow.
Their report on the T5 agreement stated: 'Unions believe that there has been no need at any time for the use of agency labour at T5 and its utilisation has been to the detriment of the project.
'The commitment to direct employment needs to be more robust and the unions doubt that the terms and conditions specified for direct employees are being successfully cascaded to all first and second tier subcontractors.'
A CLM source said: 'If the unions don't sign this then the Olympics will just be treated as any other job. It's madness on their part. This is all about the reality of life on site and being sensible. If the unions don't come on board then they will be the ones missing out.'