The City Council yesterday averted a possible labor crisis by inducing City Manager John J. Curry '19 to meet halfway with demands for a salary increase by the 1800 City of Cambridge employees, over 100 of whom flocked to the Council Chamber for the third consecutive week.

Denying the workers' demand for a flat $440 raise, the city manager stuck to his original offer of a seven per cent increase, but conceded a minimum raise of $350 for all permanent employees. Also at yesterday's meeting, the Council again declined setting a date for the referendum on the 17 controversial School Committee appointments.

The negotiations between the city and the employees did not take place as usual without fireworks. Joseph Tichanak, representative of Local 603, who chided Curry for his "schoolmaster background" at the last meeting, vehemently denied the city manager's allegations that he had asked for only $312 earlier last year. He claimed he had asked for $312 in 1957 and another $312 in 1958

Tichanak claimed that Councilor Al Vellucci had been either "pressured" or "misled," since he no longer campaigned for the $440 raise. He said he was aware "what a dirty, rotten game politics is," but maintained that city employees were no longer "bums, no longer sheep," who could be "duped."

After the pay dispute was settled, Councilor Charles A. Watson once more proposed that the referendum on the school appointments be scheduled for April 2. He was supported by Vellucci, who claimed that a high school hockey team would have to be disbanded because of the injunction against the appointment of three hockey coaches. Watson's motion failed.