Nearly 600 staff are to be sacked from the Scottish Environmental Protection Agency after they refused to accept new pay and conditions.
Some 43% of the 1200 staff will receive letters on Monday telling them they are to lose their jobs, and inviting them to apply for new posts with different contracts.
Around 120 staff are facing a pay freeze as a result. Now the public body is facing the threat of strike action.
Unison, the public-sector union, said last night the decision to sack its workers was appalling.
A spokesman said: "Sepa is behaving like the worst Victorian mill owners trying to bully staff into accepting unilateral conditions.
"Unison will not accept such dictatorial behaviour and will be discussing ways to counter Sepa's latest actions using all available means including industrial action where appropriate."
Tory environment spokesman John Scott MSP said the move would mean unnecessary worry for staff and their families.
He said: "This appears to be a very hard-nosed negotiating position that Sepa is taking.
"Of course they have a duty in terms of spending public money to negotiate the best deal they can, but they also have a duty of care to their staff."
Sepa said last night it had to introduce the new structure to meet legal requirements on equal pay and it regretted the action.
It also insisted the new system "maximises the funds available to Sepa within the pay remit set by the government and addresses concerns raised by staff and the unions about historic pay issues".
The body, based in Stirling but with offices across the country, said a significant number of Sepa's lowest-paid staff, more than 50% of all staff, have benefited under the new system.
Although no immediate pay cuts were being introduced, many workers would not receive rises in future.
The pay of more than 100 staff, 10% of the total workforce, will be "temporarily held back in order to bring their salary within their new pay grade".
A Sepa spokesman said: "At lunchtime on Friday, 758 of Sepa's staff (57%) had accepted the voluntary pay offer.
"The remaining staff who have not accepted the offer will receive notice on March 4 that their existing contracts of employment will be terminated at the end of May.
"These notices of dismissal will be accompanied by an offer of immediate re-engagement on the new terms and conditions. Sepa deeply regrets having to take this action."
The spokesman added: "There are to be no redundancies, but some staff are having their pay held back and understandably this can be demotivating.
"For many others the new system is bringing significant benefit and opportunities."
A motion of no confidence in the Sepa management has already been passed.
Unison said its members voted 93% in favour of the no confidence vote in a secret ballot.
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