After 20 Facebook subcontractors demanded better working conditions, they were told to accept a counter-offer from their company by Friday afternoon – or lose their jobs.

The labor dispute has prompted internal protest by some full-time Facebook employees (FTEs), who have been sharing updates on the situation on the company’s internal version of Facebook, known as Workplace, according to posts seen by the Guardian.

“Threatening jobs on Christmas is really disgusting,” a Facebook software engineer who saw the posts and spoke on condition of anonymity told the Guardian by phone.

The dispute concerns a group of research assistants and a program coordinator who work for Filter Digital, a subcontractor at Facebook Reality Labs. The facility in the Seattle-Redmond area, previously called Oculus Research, is where the company researches and develops virtual reality and augmented reality products.

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On 6 December, the 20 workers signed a letter to Filter Digital management seeking better employment terms.

“We have decided to be courageous and take change into our own hands by standing together in proposing changes to improve our working conditions,” the letter stated. “Many of us work second jobs, have subpar living arrangements, and/or cannot afford necessary medical care for ourselves and our families … Many are simply one emergency away from possible homelessness.”

The letter addressed inequities between the Filter employees and other employees at the Facebook facility, including workers employed by other contractors. Facebook closes its office for 11 holidays per year, according to the letter, but Filter only observes five of those holidays. Since Facebook’s offices are closed on those days, preventing the Filter employees from working, they are forced to use six out of their 10 days of paid time off to cover the other holidays – or go without pay.

The workers also requested paid sick leave, subsidies for public transportation equal to those enjoyed by other Facebook contractors, and a significant wage increase (from a starting wage of $22 an hour for research assistants to a starting wage of $30 an hour).

The letter requested that Filter respond to the group’s demands “collectively”. Collective bargaining is regulated by the National Labor Relations Act in the United States, and workers are shielded by some legal protections when they engage in “protected concerted activity”, whether they belong to a recognized labor union or not.

A Facebook FTE shared a copy of the letter on Workplace and “got a lot of positive reception from full time employees and other contingent workers”, the Facebook software engineer explained.

Then on Thursday, a Facebook FTE posted an update on the situation, stating that Filter had responded to the worker letter by holding a series of one-on-one meetings with the workers before sending them a group email on Wednesday evening.

The email, which the Guardian has seen, stated that the workers had to accept Filter’s terms of employment for 2019 or leave the company: “As we discussed in our meetings, the Facebook contract renews in January. Therefore, for business planning purposes we need to hear from each of you regarding whether you wish to continue working for Filter on this engagement … If you do not return the signed offer letter by that time, we will assume you do not wish to continue your employment with Filter.”

In the post on Workplace, a Facebook FTE who said they had been in contact with the Filter employees described the counter-offers as “crumbs”.

“Due to recent events, we’re currently working in an environment that’s honestly frightening,” the Filter employees said in a joint statement addressed to Facebook FTEs and provided to the Guardian. “The word ‘contingent’ doesn’t even begin to describe the way we feel about our future … We went through the proper channels and all we got were threats, coercion and retaliation in response.”

The Guardian contacted Facebook and Filter Digital about the workers’ claims on Thursday afternoon.

Joe Melanson, the CEO of Filter Digital, said by email that the company would provide “additional facts within 24 hours”.

“We are working closely with our counsel and Human Resources team to assess these claims,” he wrote. “We highly value our relationship with our employees.”

After publication of this article, a Facebook spokesperson said that the company had intervened with Filter Digital.

“We hold our vendors to a high standard and we immediately looked into the situation when these issues were raised,” spokeswoman Andrea Schubert said in a statement. “As soon as we heard about this email to Filter Digital employees and the potential concerns about the deadline, we addressed it with Filter Digital and they took action to communicate back to their employees.”

Melanson also contacted the Guardian after publication, to assert that the email with the 5pm deadline had not been intended as an ultimatum. Melanson said that the company had contacted the contractors Thursday afternoon to “clear up any confusion”.

“We’ve notified our employees that it was not an ultimatum,” Melanson said by phone.

The company subsequently provided a written statement: “The letter sent to our employees at Facebook Reality Labs by Filter’s HR manager was not intended to deliver an employment ultimatum. Upon learning that our message was not received as intended, we sent a follow-up email to those employees this afternoon clarifying that their employment with Filter and their engagement on our outsourcing contract with Facebook will continue at their new wages and benefits in 2019.”

The company also said that it planned to begin matching Facebook’s holiday schedule in 2019 and was making other changes to wages and benefits.

The Facebook engineer said that in recent months Facebook’s FTEs had been increasingly discussing conditions for the armies of contingent workers at Facebook, who include janitors, cafeteria workers, content moderators and more.

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“Facebook just has this internal culture of ‘We treat our employees so well; everyone is so happy’, and I think that’s relatively true for full time employees,” the software engineer said. “But there’s this massive other part of the workplace that you don’t engage with that much, and it’s really different for them.”

The engineer said that contingent workers rarely post about working conditions on Workplace, despite having access to the same internal forums, but that in recent months, some FTEs have started posting anonymized accounts of concerns on their behalf.

In their statement, the Filter employees thanked Facebook FTEs for their support.

“We’re proud of the work that we’re doing for Facebook Reality Labs and want to continue doing this work,” they wrote. “Please don’t forget about us over the holiday break, keep sharing with each other about what’s going on with our jobs, ask questions, and help us safely continue our work into next year.”