Part-time binmen have threatened industrial action after being told they face an eight per cent pay cut.

Refuse collectors and street cleaners in Brighton and Hove, recruited by employment agency Catalyst Personnel, have been told their wages will include holiday pay in future.

Unions accused the agency of attempting to exploit a loophole in new EU employment rules but said the prospect of industrial action had receded after talks last night.

Officials from the GMB union, Brighton and Hove City Council and Catalyst Personnel were locked in negotiations for four-and-a-half hours to try to resolve the dispute.

Mark Turner, of the GMB union, said: "We hope we have brokered an agreement between all three parties. It could do away with the immediate problem."

The deal will be put to part-time staff tomorrow afternoon.

The EU Working Time Directive gives long-term casual workers the right to four weeks' holiday pay like their contracted colleagues.

Some employers have attempted to duck making the holiday payments, claiming they are included in a part-time worker's wages.

One part-time road-sweeper-driver who works at the Hollingdean depot and asked not to be named, said he would lose £14 a week.

He said: "I think it stinks, putting it mildly. We have had big fights. There was nearly a strike on Friday when the men stopped work.

"There is a good chance 60 men will walk out or 60 men will close the gates. It has been done before."

On average there are 50 to 90 part-time staff working on refuse collection and street cleaning every day, out of a total workforce of 285.

The council said 25 casual workers had been given full-time contracts since it took over running the previously troubled service last October.

Catalyst Personnel is the only agency providing part-time staff for the service, which has improved since the council took it back in-house.

The council said it was concerned about the way the changes had been introduced. A spokesman said: "Talks are continuing and it is really down to Catalyst which is having discussions with the GMB.

"We are taking what steps we can to ensure the agency staff are treated fairly."