Officials from the GMB union are set to meet May Gurney chiefs today in a bid to clarify the situation.
The drop in work could hit up to 65 staff across Devon and Cornwall.
One employee told the Plymouth Herald how staff were “in limbo” after being told their hours could be cut in a bid to stave off the threat of redundancies.
GMB organiser Kevin Norman said work had dried up after South West Water hit its ‘payment ceiling’ for the year to April 1.
Norman said: “The amount of work coming from South West Water has diminished significantly, and May Gurney are therefore looking to avoid redundancies by cutting working hours.”
Staff are believed to face having their working time cut to 40 hours per week – a 12% drop for some workers.
Norman said: “What we don’t want to do is lose experienced staff, then get to April and find out we haven’t got the workforce for the jobs South West Water are wanting to do.”
One staff member said all South West staff had been called into a meeting to be given the news.
He told the Herald: “They’re playing their cards very close to their chests.
“You’re only fed one piece of the jigsaw at a time, so we feel like we’re in limbo at the moment.
“We’re not getting any straight answers, but we have been told some people will definitely go and some will have a five hours pay cut.
“A 40-hour working week is being offered – but that’s a 12 per cent pay cut and the feeling on the ground is that they’ll lose people anyway.
“All the work has stopped and all the plant hire vehicles have gone back.”