Newcastle Council's general manager says a push for the council to keep a traditional, but not official, Christmas Eve half day for staff will cost jobs.

GM Ken Gouldthorp says people will be sacked and outsourcing ramped-up as the Newcastle Council fights to rein in costs, made worse by staff wanting to be paid for a full day but only work half on Christmas Eve.

Mr Gouldthorp had fought hard to get a full day’s work from staff, but a counter attack by unions this week led to the Industrial Relations Commission ordering Newcastle Council to allow the half-day paid leave entitlement on Christmas Eve.

The United Services Union said trying to make everyone work a full shift on Christmas Eve had shattered morale, but things may now turn around.

“The order is just for this year... [but] it will provide a brief smile on the faces of some staff at Newcastle Council,” said USU spokesperson Rob Potter.

Mr Goulthorp says it will cost ratepayers more than $150,000, bleeding ever more from the severely cash-strapped council.

It will lead to lost jobs and outsourced services, the GM warned.

The United Services Union says it expects to have to fight the same fight this time next year.