Staff will not receive a pay rise next year at Waverley Borough Council in Surrey because of budget pressures.
Workers have instead been given an extra day's annual leave, to be taken during Christmas and New Year.
Council offices in Godalming, Farnham, Cranleigh and Haslemere will close on Christmas Eve and open on 4 January.
But Christmas staffing levels for essential services such as sheltered housing and collection of waste and recycling will be maintained.
Councillor Denise Le Gal said the additional day's leave was in recognition of employees' hard work.
She said: "In the light of current budget pressures, Waverley is not in a position to reward its hard working staff with a pay award.
"However, this situation is far from unique to Waverley with many workers, both in the private and public sectors, having had pay cuts or experienced job losses in recent months."
She said the pay award would next be reviewed in July 2010, when any changes in circumstances would be discussed.