Irish Rail says its hopes all sides will re-engage in further talks to avoid potential strike action at the company.
Talks to try and solve the dispute broke down at the Workplace Relations Commission last night without agreement.
SIPTU, Unite and the NBRU say they will begin balloting members in the coming days, with industrial action expected towards the end of October.
Unions are seeking a rise of around 4%, after a decade-long pay freeze.
Corporate Communications Manager with Irish Rail, Barry Kenny, says he believes strike action can be avoided.
He said: "It definitely can be averted. We will go back to the Workplace Relations Commission immediately on this and if it can't be resolved, we will take that referral at the Labour Court as the Labour Court set out.
"We do hope that the ballot process is put aside and the trade unions re-engage with us, because everybody loses if we have a dispute.
"We will lose financially and be in an even worse position in terms of trying to respond to the employees' wish for improved earnings."
SIPTU's Willie Noone, said: "Critical talks at the Workplace Relations Commission aimed at diverting industrial action in Irish Rail broke down last night due to arrogant and incredible demands made by management.
"In return for a paltry 1.5% pay rise that would only become payable to workers next year management demanded that our members accepted outsourcing, forced redundancies, line closures and reduced contract hours.
"This was a derisory offer which management must have known would be totally unacceptable to our members. Irish Rail workers are in an unsustainable position where they have not had a pay rise but only pay cuts for the last decade.
"They increasingly feel that they are being left with no alternative but to conduct industrial action in order to have their legitimate pay claim adequately dealt with."
He called the Minister for Transport, Shane Ross, to intervene in the dispute, while SIPTU's Paul Cullen staff there have played a big part in reducing operating costs at the transport provider.
Mr Cullen said: "Passenger numbers on Irish Rail currently exceed 2009 levels but the company is operating with almost 22% less staff. Irish Rail workers have made a tremendous contribution in reducing operating costs at the company by more than €38 million.
"A proposal that staff must fund a pay-rise for themselves by decimating their remaining conditions of employment is downright farcical.
"Our members in Irish Rail cannot continue to subsidise the service and accept being treated differently to other workers in the transport sector."
He also called on the Minister to intervene, saying: "The solution to the issues at Irish Rail requires government intervention.
"The Minister for Transport has previously said that he cannot intervene in a dispute once industrial action is underway. Our members in Irish Rail are calling upon him to use the current window of opportunity to work towards preventing another round of avoidable travel chaos."
Unite's Willie Quigley described the company's 1.5% pay offer as "incredible", and said that unions had no option but to ballot for industrial action up to and including strike action.
He said: "Talks broke down yesterday when management refused to improve on the incredible offer of 1.5% after an almost 10-year pay freeze – an offer which they intended funding by closing down routes, outsourcing some functions and degrading an essential public service.
"Iarnród Éireann workers will be unimpressed by the Minister’s call for the parties to return to the negotiating table, given Minister Ross’s failure to commit to a properly funded public transport system.
"The situation in Iarnród Éireann comes in the wake of disputes at Dublin Bus and Bus Eireann. The Minister is presiding over a public transport crisis not of the workers’ making."