JIM Murphy's former enforcer is embroiled in a cash wrangle with Scottish Labour over a pay off, the Sunday Herald understands.
John McTernan, still technically chief of staff, is trying to secure an exit payment before he leaves a job he has been in for around six months.
McTernan was hand-picked by Murphy to head the party's staffing operation on a day-to-day basis.
He is more senior in rank to general secretary Brian Roy and strategy chief Blair McDougall and is believed to have attracted a salary of over £80,000 a year.
He is paid, sources say, from Short Money, which is the cash given to political parties at Holyrood based on their size.
Murphy's short spell as leader came to an end in May after he led his party to its worst general election result in around a century.
The leader quit, as did a number of staff, but McTernan remains in post, although he is not working from the Scottish Parliament.
It is understood the key issue to be resolved is what, if any, financial package McTernan will receive upon his departure.
A senior party source told this newspaper that an employee in post for a short period of time may only get a notice period payment, rather than anything more substantial.
The favourite to succeed Murphy, Kezia Dugdale, is known to have a poor working relationship with McTernan and she would not be keen to offer him a job.
A Blairite, McTernan is admired internally for his political skills, but is perceived to be a divisive figure amongst MSPs who did not take to his combative style.
His appointment also worried senior party figures who believed he carried too much political baggage.
McTernan was a special adviser to former First Minister Henry McLeish, who resigned amid an expenses scandal.
He also worked on Scottish Labour's disastrous Holyrood election campaign in 2007, which ushered in years of SNP rule at Holyrood.
And he was the director of communications for former Australian prime minister Julia Gillard until she lost the leadership of her party in 2013.
A Scottish Labour spokesperson said: "We don't discuss internal staffing."
An SNP spokesperson: "Labour's never-ending obsession with in-fighting, spats and feuds is just one reason for their total political and electoral collapse in Scotland - people want political parties to concentrate on the issues that matter to the public, not on these petty squabbles."
McTernan did not respond to a request for comment.
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