On behalf of 150 professional civil servants within the agency Flanagan said: “We are extremely disappointed as this will result in the loss of two-fifths of COI’s staff, employed not only in the capital but in major cities throughout the UK.

“While the decision to cut posts is extremely disappointing, we understand job losses were inevitable following the drop of over 50% in COI’s turnover. We have been given assurances that Prospect will be fully consulted throughout this process.

“But we are deeply disappointed that the Cabinet Office has indicated to COI that redundancy payments must be capped at 15 months’ pay in line with terms due to be introduced as part of the government’s forthcoming bill.

“Staff feel the Cabinet Office is using this period of uncertainty over changes to the compensation scheme to get rid of these employees on the cheap. Not least because the COI terms contradict the offer being made to staff being made redundant in the Department for Business, Innovation and Skills.”

Prospect is seeking meetings with ministers to raise the issue.

The government plans to terminate the current Civil Service Compensation Scheme terms in October and replace them with a cap of 12 months’ pay for compulsory redundancy compensation, and 15 months’ pay for voluntary redundancy.

Prospect has proposed resuming negotiations with government on the basis of the deal agreed by five unions with the Cabinet Office in February.