Nearly 15,000 Birmingham City Council workers who had new employment contracts imposed upon them could be set for legal action which, if they win, will leave taxpayers footing a multi-million compensation bill.

The GMB union said the cost of the council’s “breach of agreements” could run into millions as a result of the way in which the controversial single status pay and grading review was implemented.

GMB regional officer Ann Lafferty is urging the union’s 9,000 council members to register an unfair dismissal or an unlawful deduction of pay claim against the local authority. She said the union was considering taking a collective action on behalf of the workforce at an employment tribunal. The GMB claims successful claimants could be in line for compensation amounting to three month’s wages.

Other unions are believed to be pursuing a similar course of action, with the deadline for registering claims falling at the end of this month. Unison, the largest council union, is understood to have 4,257 unfair dismissal claims already.

The possibility of compensation arises out of the controversial pay and grading review, which saw new contracts imposed on 40,000 workers. About 5,000 employees suffered a pay cut, in some cases by more than £10,000 a year, although 20,000 low-paid workers had a wage rise.

A one-day and a two-day strike by union members at the beginning of the year, in protest at the new contracts, caused some disruption to services but failed to weaken the determination of the council’s political leadership to force through the pay and grading review.

New contracts were imposed on all staff working outside of the education sector on April 1.

In a letter to members, Ms Lafferty writes: “Having recently received new advice from our solicitors I can now advise you that there is the potential for the union to submit employment tribunal claims for unfair dismissal and/or unlawful deductions. If you have had a new contract imposed upon you and you wish to have a claim pursued on your behalf then contact the GMB regional office.”

Ms Lafferty added: “GMB advisers say every council employee who has had a new contract enforced upon them or did not receive their full pay increase that should have been in their pockets for Christmas last year, could be awarded 13 weeks pay in compensation. The cost to the council could be millions of pounds.”

The union believes council bosses are in breach of an agreement with the GMB which stipulates that there must be a “meaningful” 13-week consultation period before any changes in employment contracts can be imposed.

Quoting leaked documents sent by the council to headteachers and chairmen of school governors, Ms Lafferty said she believed the local authority was preparing to impose new contracts on teaching assistants and school caretakers. Union leaders have questioned the right of the council to instruct school governors and heads to impose the contracts, but the matter remains unresolved.

The move appears to signal a hardening in attitude and a breakdown in talks between the council and unions representing non-teaching schools staff.

However, Ms Lafferty accepted that union members who had signed their new contracts of employment would not be entitled to compensation.

The council has stated that about 60 per cent of workers affected by the pay and grading review have voluntarily accepted the contracts.

Ms Lafferty added: “Unfortunately, people signed because they were cajoled into doing so.”