In a bid to shave £230m from its annual budget, Birmingham City Council has sent 26,000 council staff letters advising them about possible changes to their terms of employment.
The council wants to "increase efficiency" by amending terms concerning car allowances, staff parking and flexible working.
Dave Prentis, General Secretary of UNISON, said: "This is a disgraceful way to treat loyal council workers. Birmingham City Council needs to think again and withdraw the threat of redundancy, hanging over the heads of 26,000 staff.
"The redundancy notices came out of the blue and these bullying tactics are not the way to negotiate. The council is obsessed with job cuts, regardless of the effect on services to the people of Birmingham.
"The council needs to come and talk with the unions and work out a way through to find a solution, instead of going straight for a nuclear option."
While Joe Morgan from GMB union said: "The workers have been told if they don't accept new contracts they will be dismissed and re-engaged on worse conditions.
"The council's chief executive is acting like a school bully by saying that workers have to accept this or they will be sacked without compensation. Our members are in shock and are up in arms."
Councillor Alan Rudge, who oversees human resources for the council, refutes the union leaders' claims: "This isn't about reducing jobs, this is about more effective working and getting better value for money in view of the fact we are under very tight conditions over the next few years. Doing that would actually reduce redundancies, not increase them."
"At the moment less than 200 people have been made redundant and we have reduced our workforce by 2,000 by other means," he added.