Nurses' pay could be cut by more than 13 per cent unless their work to rule is called off, the Health Service Executive (HSE) warned tonight.
In a letter sent to unions, the HSE has branded the nurses' actions a breach in contract and disruptive to patients.
"The HSE can no longer sustain a situation where large numbers of staff, who are not performing their designated duties and are therefore breaching their contract of employment, continue to receive full payment," HSE deputy chief executive Brendan Mulligan said.
Writing to Liam Doran of the Irish Nurses Organisation (INO) and Seamus Murphy of the Psychiatric Nurses Association (PNA), Mr Mulligan added confirmation was required by 5pm on Thursday or nurses could face weekly pay cuts of 13.16 per cent.
The two unions said that any threat from the HSE to cut nurses pay would lead to an escalation in the dispute. The INO and the PNA said they are seeking legal advice before making a decision on what response to take.
Speaking this evening, INO General Secretary, Liam Doran and Seamus Murphy of the PNA jointly said: "Should this threat be acted upon, by the HSE, they should know and accept that it will only further solidify 45,000 nurses and midwives across the country, ensure that the campaign continues until satisfactory progress has been made on the two issues and will inevitably result in a significant and major escalation of the current campaign."
Minister for Health Mary Harney said she very much regretted the escalation of the nurses' dispute.
Asked whether she was in favour of plans to deduct nurses' pay for the time they are on strike, Ms Harney said: "The unions were aware that it is not practice to pay people if they are not working. This dispute is costing the health services €2 million a week. That's €2 million from services for patients.
"And therefore, if employers have to make decisions, they have my support in making those decisions, obviously. Because we can't on the one hand have people not performing their duties, and on the other hand the HSE spending more money to pay others overtime to cover for those that are already paid to do the job.
"I don't think anybody would believe that that was a satisfactory situation, particularly from a patient's perspective. The money would get eaten up and later in the year we'd have to cut back on services because of the dispute if we were to continue to pay people and not have the services."
Earlier today nurses staged two-hour work stoppages in a number of hospitals across the State today as part of their industrial action.
Members of the INO and the PNA stopped work between 10am and 12 midday in Cork (Mercy), Monaghan General and AMNCH Tallaght.
Between 2pm and 4pm services were hit in Waterford Regional Hospital, Midland Regional Hospital Mullingar and Letterkenny General Hospital.
The nurses' action is to escalate further on Friday with three-hour stoppages in eight hospitals.
The stoppages and a continuing work-to-rule is part of the unions' campaign for a 10.6 per cent pay rise and a shorter working week.
Nearly 300 out-patient appointments scheduled for today at a number of hospitals around the State have been cancelled by health service management due to the industrial action by nurses.