Public sector unions are threatening strike action over equal pay deals for council workers after proposed cuts of up to £35,000 for thousands of male staff, The Times has learnt.

Unison and Unite, the largest public sector unions, are balloting members in Birmingham over industrial action because nearly 5,000 staff face salary cuts to fund rises for low-paid women.

Birmingham City Council, the biggest authority in the country, with 60,000 staff, will prove a test case for other council employers, where town halls are trying to reach similar equal pay agreements.

Unite, which claims that Birmingham is breaching national agreements by scrapping existing contracts, is holding a rally in the city on Saturday to press for a better deal.

Unions have battled for decades to improve salaries for the lowest-paid women, including cleaners and care workers, but their male members and some higher-paid women are now paying the price through pay cuts and bonus losses. The national bill is estimated at £3 billion to cover salary rises for 700,000 women, including back pay of up to six years after an EU directive in 2003. Although some employers have struck deals with unions, many are now facing legal challenges from no-win, no-fee lawyers seeking better terms for women.

All town halls were expected to complete pay reviews by last March, but a recent survey by the Local Government Association showed that more than half have still failed to do so. The package in Birmingham involves 23,000 staff, including social workers, housing officers, adminstrative, managerial and professional staff. The town hall claims that 46 per cent of the staff will have pay rises, 41 per cent will retain current salaries and 14 per cent will suffer losses. Only six workers are losing between £25,000 and £35,000, but 75 face cuts of between £10,000 and £25,000, and more than 3,000 will have their salaries cut by up to £10,000. Many of those losing are only on modest salaries of about £25,000 or less.

Andrew Albon, Birmingham’s director of human resources, said the town hall had already spent £120 million on back pay settlements and the new deal would cost £23 million. He said that nearly 5,000 staff would lose money, including 3,347 women, mainly administrative staff. Seventy-five per cent of staff are women, so although more females are facing cuts, the men are being hit harder proportionately.

Mr Albon said current pay levels for losers would be protected but frozen until 2010, then these workers would face actual pay cuts. He said that 46 per cent of staff had accepted their new pay grades and signed new contracts, but 44 per cent have now been sent three-month termination notices and offers of reengagement. Unless they sign contracts by March 30 they are effectively dismissed.

“I know these are testing times for staff but Birmingham City Council has no option but to implement the new system,” Mr Albon said. “We must have a salary structure which removes inequality without placing a massive burden on the council tax payer.” Gerard Coin, the regional secretary of Unite in the West Midlands, said: “We have tried to negotiate a better deal so that fewer people would lose out, but this has not been accepted. We are demanding a fair and properly negotiated pay structure.”