Steel erectors working for contractor William Hare on the £100m Merrill Lynch headquarters in the City of London are threatening industrial action to win a 50p-an-hour pay increase.

The steel erectors are working a strict 36-hour week, in a bid to force William Hare to give the project nominated site status, which would give them an additional pay allowance.

This dispute and electricians’ growing demands have fuelled fears that the London construction market is overheating.

William Hare has introduced a “back shift” to continue work on the Merrill Lynch site until 8pm, but is understood to be refusing to grant nominated site status because it fears it would set a precedent for other London sites.

Steel erectors union the AEEU was in meetings with William Hare and the erectors on Thursday in an attempt to resolve the dispute.

William Hare declined to comment. However, Ian Wylie, deputy chairman of project construction manager Mace, downplayed talk of industrial action.

Wylie said: “There is a debate going on with the trade union about bonus rates but from our view, the steel erectors are working normally.”

Wylie confirmed that a back shift had been introduced on the scheme but insisted that the steel contract was not reliant on overtime.

The news came as the AEEU also submitted a pay claim seeking a £10-an-hour basic rate for approved electricians. This would mean a 27% pay increase for London electricians and a 35% rise for those working in the rest of the UK.

The claim, which was submitted to the Electrical Contractors Association last month, called for “a substantial increase in the basic rate. The aspiration of our members is a basic rate of £10 an hour for approved electricians”.