The Australian Services Union (ASU) says Mansfield Council workers may take industrial action, as pay negotiations break down.

The union has rejected the north-east Victorian council’s offer of a 2 per cent annual salary increase.

There also appears to be a stalemate over a clause in the new work agreement relating to job security.

ASU organiser Emma Bagg said the workers were willing to accept 2.5 per cent, but the council will not budge.

She said there is not much left to do but apply for protected industrial action.

“If we're successful in getting the no vote up that will force Mansfield back to the table to try and increase that offer or to at least get the job security clause in which is the most important thing,” she told the ABC.

“Then if we're still not successful then we've got the protected industrial action and hopefully that will get up and [we] roll that out if we need to.

“They've put forward a 2 per cent per year or $25, whichever is greater, originally we did have the 3 per cent but we've said that we'd go down to 2.5 each year of minimum of $30 each year.

“They need to be in comparison to other neighbouring councils and Murrindindi, before the rate capping came in they actually got 3 per cent.”