UNION bosses have launched a legal battle for millions of pounds in compensation over mass pay cuts.

They are fighting Southampton City Council’s plans to dismiss the majority of its workforce and rehire them for less to help plug a £25m budget hole.

Unions say this is illegal because they were not given enough warning.

They also claim the City Council could end up being penalised for “significantly more” at an employment tribunal than the £6.6m it is trying to save with the cuts. However, council chiefs insist they have acted fully within the law.

More than 4,300 council staff received letters yesterday giving them until April 7 to volunteer for a new terms and conditions contract, with pay cuts of up to 5.5 per cent.

• Southampton Council Budget Report
• Full list of Southampton Council cuts and savings

If an employee does not accept, they will be fired and rehired on July 1, having had 90 days’ notice.

But union bosses from Unison, GMB and Unite claim legally they should have been told about the dismissal plans 90 days before staff were. They said they only became aware of the new contract shortly before a full council meeting on February 16.

It is also claimed it is unlawful to make union members accept the new conditions after they collectively rejected them.

Legal action Union members are now being urged to march on the Civic Centre next Thursday and hand their letters back ahead of legal action.

This follows warnings of crippling strikes starting in May and lasting for weeks, with bin collections and street-cleaning grinding to a halt and libraries and galleries closing.

Unison branch secretary Mike Tucker said the Tory administration had “declared war” on its staff.

He said: “Having failed to convince council workers to accept savage pay cuts, they are now seeking to dismiss the whole workforce in order to force council workers to pay for their crisis. These reckless actions are unlawful and Unison will be seeking millions of pounds in compensation from the council for our members.”

Mr Tucker said the legal challenge could see the council being fined up to 90 days’ pay per employee.

This has the backing of unions Unite, which represents more than 700 members, and the GMB, which has more than 400. Both are poised to take their own legal action.

Matt Tipper, Unite lead officer for local authorities in the south-east, said: “I believe the situation highlights the arrogance and complete disdain for their employees.”

But city council leader Royston Smith rejected any claims that the council has broken the law and said the clock started in November, when unions were informed of a raft of cuts. He said: “I am fully satisfied that the council decision was made after a full period of consultation.”

Councillor Smith also insists the move will safeguard at least 400 jobs over the next two years.

He said: “I understand that some staff are concerned about taking a modest pay cut. However, the alternative of hundreds more staff losing their jobs and the public losing services is something I can’t consider.”

Already 205 staff of the council’s 6,627-strong workforce are being axed to save a further £6m.