The amount, to be shared by 309,000 civil servants, would see each receiving only an additional 97 Zimbabwe dollars ($11.28) a month, Thomas Muzondo, deputy chairman of public sector union Apex Council said after a meeting with negotiators.
That amount will buy less than 20 litres of petrol at the pump station.
"We totally rejected that offer so they (government negotiators) will go back to their principals for further consultations," Muzondo told Reuters.
He said the full Apex Council, of 17 unions, would meet in the capital Harare on Wednesday to decide its next step.
Finance Minister Mthuli Ncube on Monday told business leaders that President Emmerson Mnangagwa's government was ready to raise civil servants' pay for the second time in three months, citing inflation.
Zimbabweans are angry as year-on-year inflation of around 100pc has eaten the value of their wages and savings, recalling the horrors of hyperinflation in 2008.
The southern African nation is grappling with a severe shortage of US dollars, fuel, bread, and medicines, plus lengthy daily power cuts, which have forced businesses to use expensive diesel generators.