More jobs could be cut at Southampton City Council after it revealed its budget shortfall had grown to £25m.
Council staff were sent letters at 1100 GMT notifying them of plans to cut pay.
About 250 posts have already been cut but the council warned a further 400 jobs could go if changes to pay and conditions were not made.
Under the plans, all staff wages will be cut by 5.4%. There will also be changes to holiday pay and tighter controls over sick pay.
The council had already anticipated a shortfall of £20m but since receiving details of its funding settlement from central government, that figure has risen to £25m.
Last month Southampton City Council suggested all its workers take a pay cut and work two hours less a week.
Council leader Royston Smith said: "We now understand that we will need to find savings of £25million next year to meet the funding shortfall.
"This is really tough but the proposals we have put forward will meet this shortfall as long as all of them are adopted.
"The proposed changes to terms and conditions will allow us to save some £8.6 million next year and £12 million in 2012/13.
"If we were not to introduce these changes we would risk losing at least a further 400 jobs in that period. By protecting front line jobs we protect public services."
The proposed changes include reduction of staff pay by an average of 5.4%, a pay freeze for two years, measures to reduce sickness absence, restructuring of car entitlements, changes to mileage rates and the council's car lease scheme will be scrapped.
The council is considering protecting staff on the lowest pay grades so they are not disproportionately affected.
- 11 November 2010
- 21 October 2010
- 7 October 2010