* Workers vote to ban overtime, withdraw goodwill
* Industrial action could start end Jan.
LONDON, Jan 14 (Reuters) - The escalation of a dispute over pay at Britain's National Grid may hit the operation of the company's power network and slow its construction projects, trade unions involved in the negotiations said on Friday.
National Grid employees who are labour union members have voted in favour of industrial action short of a strike, which includes a ban on overtime and goodwill, meaning workers would not take on leave or sickness cover for other colleagues.
"National Grid is a 24/7 operation. That means it relies heavily on overtime and goodwill. Over time (industrial action) could start causing a real problem but not necessarily immediately," a spokeswoman for the Prospect union said.
Workers are likely to start industrial action at the end of this month unless National Grid comes forward with an improved offer for salary increases, the unions said.
Protest action may involve employees who work on larger transmission projects, which could suffer a delay if staff refuse to work longer hours than stated in their contracts. "The company is of course taking steps to ensure that any possible industrial action does not have any impact on gas and electricity supplies to consumers or on the safe operation of its networks," National Grid said in a statement.
The network operator this week made employees an adjusted offer of a two-year deal with pay rises of 2.5 percent for the first year and 2.25 percent the second year.
But the workforce rejected the offer on Wednesday, stalling discussions and increasing the likelihood industrial action could take place.
"We would much rather have a negotiated solution; nobody wants to take industrial action," the Prospect spokeswoman said.
"The company has done so well. Why should the work force not benefit from that? They're the ones who actually do the work that helps the company do well."
National Grid in November posted a 45 percent jump in adjusted pretax interim profits to 938 million pounds ($1.5 billion).
(Reporting by Karolin Schaps, editing by Jane Baird)