Payouts of up to almost £1,000 are set to be made to Sandwell Council workers who will see their petrol allowances slashed under plans to save £1 million a year, it emerged today.

Workers have threatened to strike over plans to reduce petrol allowances from up to 65p a mile to 45p a mile.

The move has been  branded an “effective pay cut”.

But now the authority is offering hundreds of pounds to cover this year’s loss up to March 2012. Unions must make a decision on whether to accept the offer by Friday.

Earlier this year the council announced plans to cut the amount workers can claim for fuel, in line with government guidelines.

An annual lump sum for 800 workers who have to use their cars for business is also being slashed.

Bosses say it will safeguard 50 jobs.

It has now emerged that essential car users who face having their lump sum and allowances slashed would be paid what they would have received up until March 2012.

They will also be able to claim the new mileage rate.

Sandwell’s deputy council leader Councillor Mahboob Hussain, said: “The council recognises that some essential users would appreciate time to adjust. The council is making a lump sum proposal which would ensure no impact on income for employees in this financial year.”

For July 2011 to March 2012, the lump sum is £929.25, £722.25 or £634.50 per employee, depending on the vehicle.

Employees classed as essential users but who have other arrangements would get a lump sum based on the lowest rate, Councillor Hussain added.

Brian Rickers, of the Unite union, said: “We are waiting for ballots to come back and then we will have more of a feel for what our members want to do.”

Results were expected back later today.