Talks between Eircom and its group of unions on a compensation package for 1,300 employees due to move to Vodafone as a result of the Eircell sale are understood to be deadlocked.

Without union agreement or a waiver by Vodafone of the obligation on Eircom to resolve the dispute as part of the sale, it cannot go ahead. In the unlikely event that Vodafone exercises its waiver rights, senior trade union sources said yesterday that the company would be "buying the dispute as part of the overall package".

A spokeswoman for Vodafone declined to comment. She said it was not company policy to comment on what was still a hypothetical situation. An Eircom spokesman said it would be inappropriate to discuss the issues publicly at this stage in the negotiations.

Vodafone and Eircom could both do without this complication in a deal already beset with other problems. The stakes are high, with the unions seeking a £45 million package to compensate Eircell staff for projected benefits they claim will be forgone when they leave the Employee Share Option Plan Trustee (ESOP) to join Vodafone. The problem is that, when the ESOP was set up, no one envisaged a situation where around 15 per cent of the workforce would be hived off into a completely different company.

So far Eircom is understood to have suggested that the best way of dealing with the problem would be for the ESOP members to change its constitution.

This would allow them to either hive off a section of the ESOP funds for investment on behalf of the Eircell employees, or allow them to remain in the ESOP. Such changes would, however, be extremely complex and open to legal challenge if implemented.

More fundamentally, senior union sources say there is no question of them being able to persuade the vast majority of longserving Eircom staff to dilute their investment to help Eircell staff, 1,000 of whom have never worked in Eircom and 400 of whom have less than a year's service and are therefore not yet eligible to join the ESOP.

A further complication is that 260 of Eircell's technical staff are on secondment from Eircom and are expected to exercise their right to return if the problem of the ESOP is not resolved. Without them, Eircom could not meet one of the requirements of the sale, namely that sufficient Eircell staff transfer to Vodafone with the company to keep it a viable concern.

Both sides are to due to meet again on Monday. Unless there is substantial movement on the ESOP issue, there seems little hope of a quick or easy sale of Eircell.