Dimensions, a not-for-profit organisation for people with autism and learning difficulties, is in talks with Unison over proposals that the union has described as "drastic reductions in pay and conditions".
The organisation, an industrial and provident society, supports 2,500 people in England and Wales and has 4,000 staff, of which about 3,500 would be affected by the proposed changes.
A statement on Unison’s website says: "The proposals as they currently stand propose drastic reductions in pay and conditions.
"We have told Dimensions management that irrespective of the organisation’s financial problems we cannot support the proposals as they currently stand.
"The level of losses for many Dimensions employees are simply unacceptable and would leave many people facing annual earnings losses running into thousands of pounds.
Dimensions said it was not cutting basic salaries and was not planning any job losses.
The Unison statement says that Steve Scown, chief executive of Dimensions, had written to staff with a "very threatening statement that staff who do not accept the proposed terms and conditions by 6 June 2012 will be dismissed and offered re-engagement on the new terms". Scown denies the letter was threatening.
The statement also says the union "cannot cooperate with a process where public sector bodies are able to pass on cuts in funding in the expectation that Dimensions will accept them and in turn pass on the reductions to their own staff's pay and conditions".
Dimensions is making changes because of cuts to its funding from local authorities.
A spokesman for Unison said it would be inappropriate to comment further on the statement because the union was in negotiations with Dimensions.
Scown told Third Sector that some Dimensions employees had varying terms and conditions and the proposed changes would introduce uniformity for all staff in areas including annual leave, bank holiday payments and maternity and paternity pay.
He said the organisation would not cut basic salaries and was not planning any redundancies. "Staff will be affected in different ways, depending on their pattern of work," he said.
The statement that Unison described as threatening, he said, was an attempt to explain the proposed changes clearly to staff. "It contained an acceptance sheet and recommended that staff sign it and return it to us," Scown said.
"I accept that it may have inadvertently caused confusion, but I would not write a threatening letter to staff."
Scown said it was too early to say how much money he expected the charity to save under the proposals.