CITY council staff have received bonuses totalling more than £340,000 after hitting a £4.2 million savings target.

The authority has given more than 1,000 of its 1,200-strong staff a “partnership payment” of up to £416 each for their help in reducing expenditure.

The cash, paid on a pro-rata basis, has been welcomed by union officials who say staff have been denied pay rises for three years.

The payment was made to members of staff in departments which met criteria, including managers of small teams, but not directors or the chief executive.

But it was condemned by the TaxPayers’ Alliance.

Council leader Bob Price likened the payments to those made by department store John Lewis , and said employee engagement had played a key role in savings schemes.

He said: “There’s no pay increase this year, and they have voluntarily worked with us to deliver savings, which you’d think would be something the Taxpayers’ Alliance would be happy about.

“Bear in mind a lot of these people are very low paid, whose average salary is between £20,000 and £25,000 – they’re not executives earning substantial amounts.”

But Caroline Glendinning, from the Unison union, which has opposed council cuts, said the result was “bittersweet”.

She said: “To be honest we weren’t that enthusiastic about it at the start, but given the fact we’re probably going to be entering into the fourth year of a pay freeze it will be welcome to those who have received it.”

She said there was some annoyance caused by the conditions applied to the payout, and said some people with genuine reasons for sick leave missed out.

She said: “It’s a positive thing in as much as it’s put more money in our members’ pockets, but it’s bittersweet.”

TaxPayers’ Alliance campaign manager Robert Oxley said: “Many businesses and families are taking tough decisions as they tighten their own belts, and they certainly won’t be receiving generous taxpayer-funded bonuses.

“So it would appear that those running Oxford City Council think the public sector pay freeze doesn’t apply to them.”

Council spokesman Annette Cunningham said the partnership payment was agreed by Oxford City Council in 2011/12 as there had been a pay freeze for three years for local government officers.

She said: “The payment, which was agreed by unions, is paid to staff who have achieved their performance appraisal targets and have a good attendance record, and so have contributed towards the council achieving its savings target.

“Ongoing annual savings of approximately £4.2 million were achieved during 2011/12 in line with the budget, representing 16 per cent of the council’s net revenue budget of £25.8 million.

Oxfordshire County Council and the other district councils in the county have ruled out using a similar incentive.

The county’s cabinet member for finance, Kieron Mallon, said: “The county council is currently meeting its savings targets without such a system.”

Cherwell, Vale of White Horse , and South Oxfordshire councils said they had no such scheme.