Staff at Shropshire Council have been told they must accept a 5.4% salary cut and changes to sick pay or face the sack.
The authority approved the proposals on 23 June, claiming the changes would save £7m and protect at least 400 jobs.
Unions are understood to be balloting staff on industrial action after Shropshire decided to implement the cuts by dismissing staff and offering to re-employ them on new contracts.
The council failed to reach a collective agreement on the changes with staff and union officials, despite a 90-day consultation and a series of meetings.
“The council has decided, reluctantly, to make these changes by way of terminating the contracts of all current staff, and then making all staff an offer of immediate re-employment on new terms and conditions with effect from 1 October 2011,” said Jackie Kelly, Shropshire’s head of organisational development.
“While we appreciate the formal nature of this process may lead to some anxiety, we intend to continue offering reassurance, guidance and support to all our staff over the coming days, weeks and months.”
The Conservative-led council said it would continue negotiating with unions to try to reach a collective agreement by 30 September.
Shropshire must save £76m over the next three years.
In Southampton, also run by the Conservatives, social workers and other staff are taking industrial action against pay cuts of up to 5.5%.
However, the authority has agreed to give all employees earning less than £21,000 a year a £250 pay rise.
No one from Unison was available to comment on the Shropshire dispute.
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