Hallam says a mistake was made in 2007 when cleaners and catering staff were moved on to a new pay framework, to a grade higher than should have been the case.

The university is even demanding their staff give back the cash which they were wrongly paid – which could be as much as £2,800 for full-time workers.

A letter to workers concedes the move will "come as a shock" to affected staff but says now the error has been discovered it cannot be ignored and hourly pay rates will be cut at the end of March.

A cleaner currently earning up to £8.61 per hour will instead receive £7.54 – and new staff will receive even less. Hallam says comparable jobs at other organisations only pay between £5.73 and £6 an hour. Extra pay for working at weekends and special events is also being axed.

But a cleaner at the Collegiate Crescent campus said affected staff felt insulted and unhappy.

"At the moment I take home £119 per month and my wages will fall by £40 – others will lose £70," she said. "As for the back pay, that will leave me with a bill of £600. How do they expect me to afford that? Will that be clawed back from my pay packet as well?

"We thought we deserved our pay rise in 2007 but now they say an error was made – but that was hardly our fault. Hallam seem to be saying they will waive the back pay if we accept the cut with no fuss but that sounds like blackmail to me.

"We are also feeling victimised – people like the porters and the security staff are not being affected by this. Our union is currently seeking legal advice."

A joint statement by Unison and the GMB said some Hallam staff had been informed a review of support staff grades had uncovered errors in the role descriptions which were originally used to determine the grade of their posts.

"As a consequence domestic assistants and general catering assistants have been told, to their shock and dismay, that their roles should be grade two posts and not grade three posts.

"GMB and UNISON, as the unions representing the interests of this group of workers, are in discussions with our members and the university in order to find a way forward," the statement added.

A Hallam spokeswoman said the mistake on pay grades needed to be rectified to ensure their pay and grading structure was implemented equitably across the university.

"Following the regrade these staff will still earn £7.54 per hour, around £1 per hour more than their counterparts across Sheffield, and their pay will be in line with those in other universities across the UK.

"The university recognises that paying back overpayments could have a financial impact on staff and is working with local unions to try and minimise any effect. Those discussions are ongoing."

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