Staff at Warburtons may be heading for strike action after they rejected a below-inflation wage offer and changes to their working terms and conditions.

The Bakers, Food and Allied Workers Union (BFAWU) will ballot its 1,000 members between 10 and 24 October over possible industrial action at Warburtons’ 24 UK bakeries and depots.

Sources revealed that Warburtons has offered staff a deal including a 3.7% annual pay increase, but with team leaders considered separately, plus a regime where additional payments would be triggered if the company hits collective absence-reduction targets. For example, if overall absence was reduced by 1%, all staff would be eligible for a wage increase.

However, unions are believed to be unhappy that the basic increase is below inflation, which has been running at 4%. Collective responsibility for absence-reduction is another sticking point as unions believe that only individual performance should be taken into account.

A source said: "Warburtons is the second strongest brand in the UK behind Coca-Cola [Nielsen figures, 2007]. It wants to be a Premier League team, but it is not paying Premier League wages. It has put up its prices by 10%, but not its wages. This has been brewing for the last three to four years."

Warburtons said in a statement: "Warburtons can confirm that it has been in discussions with the BFAWU around annual pay negotiations. An agreement has yet to be reached.

"The BFAWU is planning to ballot its members on 10 October to gauge support for the principle of taking strike action. Warburtons will continue to try to resolve any differences amicably and through negotiation, both ahead of and following any ballot."