The firm announced by letter that the staff will no longer be paid from Friday.
The blast at Wood Treatment Limited in Cheshire caused a four-storey building collapse on 17 July.
A council leader said he was "appalled" at the treatment of staff by the mill owners, who declined to comment.
Temperatures reached 1,000C in the blast and it was described by rescuers as the "worst incident of its kind" in a decade.
Four people unaccounted for after the blast were Derek Moore, 62, from Stoke-on-Trent, William Barks, 51, from Leek, Jason Shingler, 38, from North Rode, and Dorothy Bailey, 62.
Will Barks, Derek Moore and Dorothy Bailey  have been identified as victims. Other remains have been found. Jason Shingler, 38, is still missing.
Councillor Michael Jones, leader of Cheshire East Council, pledged to support employees and residents.
He said: "I'm appalled at the treatment of these people by the mill owners. Whatever business is done by them from the site should deliver local benefit.
"As the leader of the council, I'm asking the questions as to why the company feels it can just walk away from these people and offer almost no support."
He added: "How do they expect people who are traumatised to cope financially?"
The council has established a drop-in centre in the village providing advice about employment and benefits.
An investigation is underway into the cause of the explosion.
Wood was processed at the plant into a fine powder and the resulting "wood flour", with a consistency like sand, was used to make laminate flooring.
The BBC contacted Wood Treatment Limited for a comment on the redundancies, but it declined to make a statement.
The GMB union said it was "disappointed" to hear the company has issued notices of potential redundancies to its workforce.
Regional organiser Ray Carrick stated "We are further alarmed that the employer has informed its workforce that they will not be paying any more wages to them, even though the consultation has not been completed."
It has called a meeting on Monday at 14:30 BST at the local primary school in Bosley.
The owners of Bosley mill, where four people are thought to have died in a fire and explosion last month, have made 20 staff redundant.