Public sector union Unison says the council's decision to invoke "immediate spending controls" on all services with the exception of safeguarding children and vulnerable adults will "destabilise" the children's services workforce.
On Friday, the council issued a "section 114 notice" banning any new spending with the exception of safeguarding vulnerable children and adults. In a statement, the council said the notice - a provision of the Local Government Finance Act - was served "in light of the severe financial challenge facing the authority and the significant risk that it will not be in a position to deliver a balanced budget by the end of the year".
The council is to discuss the implications of the notice at the end of February but has assured staff that it will not affect pay or the authority's statutory functions.
Unison branch secretary for Northampton county Penny Smith, said staff were told just before 5pm last Friday of the council's decision to issue the section 114 notice.
"Quite what this means for staff we don't know yet," said Smith. "It will have a destabilising effect on children's services - a lot of staff will be worried by it and looking for other work. It is a challenge to keep children's social workers as it is and there are always vacancies."
Smith added that over the next few days she hopes to clarify whether the section 114 notice will affect issues such as allowing overtime for staff, employing temporary workers and paying expenses. She will be raising these issues with a government-appointed inspector, she added.
According to latest Department for Education figures, the council employs around 230 full-time equivalent children's social workers, out of a total staff of 4,500.
Children's social worker vacancy rates in Northamptonshire were 24 per cent in 2016, while staff turnover was 19 per cent. Both had improved compared with 2015.
The British Association of Social Workers (BASW) said it is "very concerning" the council had taken such "extreme measures".
In a statement it said: "BASW has been warning of an impending ‘perfect storm', where an increase in demand for social services is being met with continued reduction in funding. This combination has contributed to the recent year-on-year rise in child protection plans, as well as an overburdening of social workers that has led to recruitment and retention issues. The same problem is being experienced acutely in the NHS."
It is the first section 114 notice issued in nearly 20 years, but children's services experts believe other authorities could follow Northamptonshire's lead.
Kathy Evans, chief executive of Children England, said: "We should not assume that Northamptonshire will be the only council facing a budget that can't be balanced. Central government must take urgent action to address the funding crisis for children's services right across the country."
In late 2015, the council announced plans to create an independent trust to run children's social care by September 2016. However, the independent trust is yet to launch, and last year the council received £4m from the DfE's children's social care innovation programme to continue developing the plans.
The council's children's services department was judged "inadequate" by Ofsted in 2013, and upgraded to "requires improvement" in April 2016.
A Ministry for Housing, Communities and Local Government spokesman said: "We recently appointed an independent inspector to look at Northamptonshire County Council's finances.
"This is a decision for the authority, and it would not be appropriate for us to comment while the inspection is ongoing."