A pay and grading review at Leeds City Council could see its entire workforce made redundant and re-employed on lower pay, a union has claimed claims.
Unison has written to its members after negotiations with the council about changes to offer thousands of staff equal wages for work from April 2007.
The council said the union's letter was "disappointing and alarmist".
It said there were limited protection arrangements to ensure no-one was paid less when the review was implemented.
But the council's chief executive, Paul Rogerson, said he could not guarantee that no-one would suffer a pay cut as a result of the review "further down the road".
Local authorities across the UK are implementing the pay and grading review as part of a national agreement.
Of the 28,000 council employees in Leeds who stand to be affected by the changes, Unison claims 7,000 are considered "vulnerable to pay cuts".
It said the council initially indicated that it would work with them to avoid pay cuts.
But it has since been notified of a consultation process on the council's intention to make its entire workforce redundant with a view to offering people their jobs back on new contracts.
"It is not our intention to break off negotiations but Unison members have to be alert to the idea that the employer is perhaps expecting that there will not be an agreement and looking to 'plan B'," Unison told members.
Mr Rogerson said letters giving notice to "dismiss and immediately re-engage" would only be sent to staff if agreements can not be reached.
"The unions have indicated that they would find it very difficult to enter into a collective agreement on this," he said.
"What we can't suffer to continue is a state of affairs where men and women who do the same work are paid differently, so we don't have any choice in this matter."