Glasgow City Council has agreed to pause plans to fire and rehire more than 23,000 members of staff, the BBC has been told.
The decision follows online talks between the council and three trade unions, chaired by Deputy First Minister Jenny Gilruth.
It is understood that negotiations between the council and the GMB, Unison and Unite unions will resume early next week to try to reach a new deal on pay.
Letters which had been due to be sent to staff informing them of the fire and rehire plans will not be issued.
The SNP-led council had threatened to sack thousands of members of staff and then rehire them on new contracts after negotiations with unions over equal pay proposals broke down.
The talks were about the council's plans to replace a pay system found to discriminate against mostly women workers. The changes would see the majority of staff unaffected or better off, but they would cut pay for 11% of staff.
Gilruth said the Scottish government did not support fire and rehire schemes and had urged the council and trade unions to get back around the negotiating table.
One Glasgow City Council worker had earlier described the situation as "heartbreaking".
Joanne, a support for learning worker from Glasgow, said the local authority "had a cheek to say they care about their employees" after she read the council's message saying it was dismissing all staff.
She was told two weeks ago that she would be one of the workers facing a pay cut under the new system, leaving her "distraught". She will lose about £300 per year.
She said: "I came away from my work crying - really, really upset. I couldn't believe that after 25 years' service to Glasgow City Council, I am getting let down yet again."
She continued: "I am working with the most vulnerable children in society. I would put it to Glasgow City Council: please come and do my job for one day - one day only.
"It is so wrong, and I can't afford to lose money."
At a meeting last month, the council agreed to an overhaul of its pay and grading structure after eight years of negotiations.
The council has previously paid over £770m to 19,000 claimants after it emerged that female workers in roles such as catering or cleaning were paid less than those in male-dominated areas such as refuse collection.
The new system would see 63% of those affected gain financially, while 11% would have their wages reduced.
It was calculated after a job evaluation programme looked at each role within the local authority.
This saw staff being given questionnaires to fill out, and in some cases interviewed about their job.
Each evaluation was based around 13 different factors. Categories included physical effort, mental skills, concentration and physical co-ordination.
The job evaluation then provided a score for each role within the council, with those scores used to establish which pay grade - out of a possible 12 - each job should sit in.
However, this has resulted in some roles being moved onto lower salaries than they were previously on, with the highest drop in wages expected to be around £11,500.
Talks between the council and the GMB, Unison and Unite unions fell apart on Wednesday when Unison said it would not ballot its members on a proposed new pay offer.
The council said its new proposals would protect workers set to lose out for an extra six months, and it accused Unison of "betraying" members by not giving them the chance to vote on it.
In response, Unison's education convener Sylvia Haughey told BBC Radio Scotland Breakfast the council was using "bullying tactics".
She said: "We haven't betrayed anyone, we certainly haven't betrayed our members. We are out fighting for our members.
"We are fighting for the members who are... losing big financial amounts, whether its £200 or £12,000.
"We have not walked away from anything. We are willing to speak to the council at any time."
Glasgow City Council’s communications director, Colin Edgar, said it was a "hellish situation" that "almost no one" wanted to be in.
He told BBC Scotland News: "Our staff are going to be distressed, they’re going to be anxious.
"I can reassure them that when their contracts end and restart the next day there will be no break in their continuity of service. They will all be rehired."
He said the council does not want to be in this situation, but it is a consequence of fixing an unlawful pay scheme.
"Whenever any council does this exercise, there are people who gain and people who lose - in our case that’s about 11% of people who will earn less," he said.
Edgar added that the two other unions are on board with the changes.
Both the GMB and Unite unions were in favour of balloting their members over the proposed pay structure.
Before the council announcement, both unions said they had secured an extra £110m to be added into the salary structure.
However, Unison said the extra funding was for "assimilation and arrears", and would not help the staff facing wage cuts.
The GMB and Unite unions both criticised the decision to go ahead with fire and re-hire, with Unite calling it a "scandalous threat".
The UK government's Scottish Secretary, Douglas Alexander, said the council's action comes just months before UK government legislation will make fire and rehire schemes illegal, a move he called "the biggest upgrade to workers' rights in a generation."
"The council leadership should get back around the table today and find a better way forward," he added.
