Officials at Nottingham City Council will take legal advice after the authority announced it would be cutting more than 100 jobs.
In July, the council said it would be cutting 153 jobs and offering voluntary redundancies.
Three trade unions, which have come together to lodge a formal dispute, have said there could be as many as 500 voluntary redundancies.
The authority has approved the spend of £75,000 on independent legal advice for employees entering into a settlement agreement as part of the voluntary redundancy process.
It has chosen to use the workforce reserve to fund this cost and work with Freeths.
A council report about the legal advice funding outlined how the authority had been hit financially as a result of the coronavirus pandemic.
It said the council had been allocated £23.5m from the Government towards coronavirus costs and losses – but that this funding was ‘insufficient’ in light of increased service demand and reduced income.
The authority’s report read: “The current estimate is that COVID-19 has cost NCC a minimum of £88m and this figure is likely to increase further.
“Without significant additional funding for COVID-19 costs and losses, NCC face serious concerns over the budget for this year.
“The financial impact of COVID-19 is also likely to affect our budget for several future years.
“In response to COVID-19 and the existing budget challenges, NCC is actively lobbying (the) Government for additional support.
“However, indications are that any further funding is likely to be limited, for example, the Government has already indicated lost income will only be funded at 75%.
“NCC has a set of budget proposals that may result in redundancies.
“NCC aims to reduce the need for any compulsory redundancy through the consultation process.
“Where redundancies are required, it is proposed that Voluntary Redundancy (VR) applications will be used to fulfil the budget proposals.
“The final date for VR applications is 19 August 2020.
“VR applications for colleagues that are approved by management will be required to receive independent legal advice prior to signing the agreement.
“This decision, therefore, is to request the expenditure to enable the settlement agreement process to go ahead and achieve the ultimate savings required in the budget proposals.”
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Other measures were previously announced, including the closure of a day care centre for people with disabilities, some playgrounds and a charge of £25 for houses with a third parking permit.
The city council is facing enormous pressure on its budget.
It has written off £24 million in debt to its energy company, Robin Hood Energy, amid claims of ‘institutional blindness’ about the financial position of the firm.
The collapse of retail giant intu means the council has said it is ‘unlikely’ it will get back all of the £17 million it invested in the Broadmarsh project.
On top of that is the huge financial pressure from Covid, with dozens of events cancelled, sharply decreased income and a rise in demand for some services.