Since the early 1980s there has been a reshaping of the public services through contracting out, privatisation, purchaser/provider splits and the private finance initiative, which has resulted in the injection of-market principles or proxies for them and the structural blurring of the public/private sector divide. These structural changes have impacted on employee relations but the key question is in what ways has there been change and what is the extent of change. Has there been transition towards or transformation to a market orientation?According to the Concise Oxford Dictionary a transformation is a metamorphosis, which is a change of form or a change of character. According to Bach (1999a) transformation is purposeful and sustained, while Ferlie et al (1996, p.33) argue that transformational change is multi-dimensional, multi-layered and fundamental. Transformation can be contrasted with transition, where strong elements of continuity persist and the process is incremental and teleological. According to the Concise Oxford Dictionary transition is the process of changing from one set of circumstances to another. It is an interim stage. This article, which draws mainly from the civil service and the National Health Service (NHS) falls into five sections. The first section takes an overall view of the transformation/transition debate in respect of public service employee relations. The second section takes the debate further by breaking down employee relations into specific issues and evaluating the areas where change has taken place. The third section considers whether the process of change is being reversed under the Labour government. The fourth section looks beyond this to within the public services. In the fifth section conclusions are drawn.The argument developed here is that complex and uneven trends can be seen in the changing nature of employee relations both between the different public service organisations themselves and within each public service organisation. Whereas on the whole transformation is a more appropriate term for the civil service, there are variations in the extent of change between civil service executive agencies. Similarly, whereas on the whole transition is a more appropriate term for the National Health Service, there are variations between NHS trusts.