Between 326 and 376 members of staff are being given £100 bonuses per month (pro rata for part time) if they work on the front line or have been asked to change job roles.
Coun Dr Erica Lewis, leader of Lancaster City Council, said the money has been paid to some workers in recognition of the extraordinary circumstances the council faced during the emergency phase of the coronavirus pandemic.
But one member of staff, who did not wish to be named, said: "I tried to turn it down, as I don't feel I need it and it just feels wrong.
"It's unsustainable in my opinion and my colleagues agree.
"A lot of the recipients aren't front line staff either, and they aren't low paid people.
"In some cases it's people on big salaries."
Coun Dr Lewis said: “From the outset of the coronavirus pandemic the council has been working hard to ensure the health and welfare of all those living within our local communities, particularly those who are vulnerable and in urgent need of vital support.
“With such a crucial role to play, plans were quickly put in place to reallocate approximately 300 staff into very different roles, such as contacting vulnerable people, delivering food parcels, administering grants to local businesses and to help provide a seven day advice line via a new community response hub.
"Some staff were also required to retrain, to help deliver priority services such as waste collection and cemetery services.
“Whilst the majority of council staff were able to perform their roles from home, those providing vital services such as waste collection, street cleansing and building cleaning, were unable to, putting themselves and their families at greater risk.
“These key workers, who had no choice but to physically come into work, were given an honorarium during the emergency phase of COVID in recognition of the extraordinary circumstances which we faced.
“Many of those working on the front line during this time received numerous messages of gratitude for the service they continued to provide throughout the most critical phase of the pandemic.
"We too are very grateful to our staff who stepped up to the plate, often working long hours to support and protect our communities."
The number of staff receiving an honorarium for their role during the pandemic so far ranges from 326 and 376 per month, with more than £108,000 paid out to employees so far.