The union’s local authority membership voted by 55 per cent to 45 per cent to reject the deal in a consultative ballot.
Unite’s local authority committee had recommended a rejection of the pay offer, which would give a 3.5 per cent rise this year for those earning under £80,000, with 3 per cent increases next year and in 2020 for all staff.
The union warned the next steps could result in strike action and it plans to hold a meeting to discuss further moves.
The committee is concerned the deal does not include a “trigger clause” to reopen talks if Brexit leads to a rise in inflation.
It also said it fails to restore local authority workers to the levels of real terms pay from 10 years ago.
Wendy Dunsmore, Unite industrial officer, said: “This result is a clear indication that our members remain unhappy with Cosla’s offer.
“Our members have suffered pay freezes followed by real terms cuts for far too long.
“This has impacted most on the lowest paid workers across the councils.
“Cosla will need to dig a bit deeper if we are to avoid industrial action.”
Unite’s local authority members previously voted by 73 per cent to reject a previous £350 million, 3 per cent pay offer in October, arguing they were being offered less than teachers.
A Cosla spokesman said: “We are disappointed with this result.
“We as employers have nowhere left to go.
“Strike action is not in the interests of anyone.”
A ballot on the same deal for Unite craft members working across Scotland’s local authorities will close on February 4.