In a dramatic escalation of the dispute involving 40,000 nurses, HSE chief executive, Brendan Drumm and his senior management will meet on Tuesday to consider a number of options to counteract the effect of the action which the HSE claims is costing 2m a week.

These options range from a pay cut of over 13% to the complete removal of all nurses from the payroll . . . in effect, a 100% pay cut.

It is understood that health minister Mary Harney has signalled her political approval of the tough new measures being contemplated by the HSE.

It is believed that if the HSE does take action, the most likely option is the lesser 13% pay cut which is the exact amount that the nurses received under the last national pay agreement, Sustaining Progress.

The HSE says that this 13% was given to the nurses over three years ago on the basis that they co-operated with change and agreed to process any pay claim through benchmarking.

Management now regard the INO and PNA as having reneged on that agreement and, in an unprecedented move in such a politically-charged dispute, they are looking for their money back.

"This work-to-rule is compromising the HSE's ability to look after its patients and it is also costing the taxpayer 2m a week which will have to come out of the health budget.

"The HSE would be creating a dangerous precedent if it allowed its employees to get away with this without retaliatory measures, " said deputy chief executive of the HSE employer's agency, Brendan Mulligan.

However, Dave Hughes, assistant general secretary of the INO, warned that employers would pay a "heavy price" if they take such action. There would be never-ending and bitter consequences and the employers would never be forgiven, warned Hughes.

The INO said it was deeply ironic that HSE management were considering such a move when they themselves had been involved in a work-to-rule three years ago over an ultimately successful pay claim pursued outside of the national agreement. Yet the HSE managers didn't cut their own pay, said the INO.

If the HSE goes ahead with its plan to cut wages, management will write to each of the 40,000 nurses involved in the work-to-rule asking them whether they are prepared to resume normal working.

"They will have seven days to respond and if they don't wages will be docked, " Brendan Mulligan warned.

The deepening rift between the two sides comes after peace talks collapsed last week with the parties as far apart as ever on the nurses' claims for a 10.6% pay rise and a reduction in the working week from 39 to 35 hours.

The unions immediately resumed their work stoppages with one-hour stoppages at 22 hospitals and medical facilities.

Longer stoppages of two to three hours are planned for this week.

HSE network manager, Angela Fitzgerald, said that this week's escalated action could put 3,000 patients at risk and has already led to the cancellation of 1,500 elective procedures.

"The HSE has also highlighted the decision by the INO/PNA to commence the escalation one day after a bank holiday weekend, during which time their members enjoy double time and weekend rates, " she said.