The sale of the State’s lottery franchise, which is set to net the exchequer €405 million, is being held up because of a row over the proposed transfer of staff to the next operator.

The Government had been due to sign contracts this week with the preferred bidder, Premier Lotteries Ireland, but this has now been deferred indefinitely as a result of the dispute.

National Lottery workers are refusing to co-operate with the transfer of the business until they receive certain guarantees on their future employment status. Most of the 103 staff at the operation's Dublin headquarters are employees of An Post on permanent secondment to the lottery and still contractually tied to An Post.

As part of the process, they are seeking a right of return to the semi-State or, at very least, a continuation of their secondment arrangements.

Under proposals set out by the Labour Relations Commission (LRC), lottery staff would transfer to the next operator under the transfer of undertakings legislation, which guarantees their basic pay and conditions.

Because legislation does not cover pension entitlements, the LRC also proposes staff be offered new pension arrangements “no less favourable” to their current An Post pensions. Workers, however, believe their terms and conditions may be eroded over time if they leave An Post.

Paul MacSweeney, assistant general secretatry of the CPSU, one of three unions involved, said unions were seeking further clarification from the LRC before putting the proposals to a vote.

According to sources, the Government had been expecting to bank the first installment of the Premier Lotteries’s €405 million winning bid by the end of the year.

A spokesman for the Department of Public Expenditure and Reform declined to comment on the dispute.

Premier Lotteries Ireland, which comprises UK operator Camelot and An Post, also declined to comment on the dispute but it is understood the consortium wants the issue ironed out before entering into a contract with the Government.