Glasgow City Council and its largest trade union have reached a breakthrough in their protracted pay dispute, with plans to fire and rehire thousands of workers paused while staff are given a vote on an improved deal.

Unison has agreed to ballot its members on proposals for the council’s new pay and grading system following intensive talks involving the local authority and the Scottish Government.

The latest agreement extends pay protection for workers who stand to lose money under the new system to three years.

The council has also agreed that dismissal and re-engagement notices will not be issued while Unison carries out its ballot.

It marks progress in the dispute after Glasgow City Council previously warned that around 23,000 non-teaching employees could have their existing contracts terminated and be offered new contracts under the revised pay structure.

The threat prompted widespread criticism and intervention from Deputy First Minister Jenny Gilruth.

The dispute centres on the council’s attempt to introduce a new pay and grading system following the long-running equal pay battle in Glasgow.

Most employees are expected to either receive a pay increase or see their wages remain broadly unchanged under the proposals, but around 11% of workers assessed so far could eventually see their pay fall.

Some employees have been told they could lose more than £10,000 a year once pay protection arrangements end.

Under the improved position reached following the latest negotiations, workers facing reductions will have their existing pay protected for three years.

Further negotiations will also take place over a series of unresolved issues, including the impact on lower-paid workers, allowances, jobs which have not yet been evaluated, equality impacts and how the new pay model will operate.

Unison Glasgow branch secretary Chris Sermanni said the union’s refusal to accept the previous proposals had resulted in significant improvements.

He said: “Unison stood firm because Glasgow’s workers deserved better than what was originally put on the table.

“That position has secured significant movement. Staff will have three years’ pay protection and further commitments around workers facing detriment.

“There’s now a path for Unison members to give their verdict without the immediate threat of dismissal and re-engagement hanging over them.”

Sermanni added: “Importantly though, this isn’t Unison’s acceptance of the pay and grading package and the fight for improvements isn’t over.”

The union is expected to ballot members later in October, with the vote likely to run for around four weeks.

Unison said negotiations would continue before the ballot as it seeks more information and further improvements to the package.

The new grading system is intended to finally address historic inequalities in the way jobs at Glasgow City Council were valued and paid.