Businesses say reforming the Employment Relations Act will clean up a silly situation where they cannot get rid of workers when a company is sold or restructured.
The Government is proposing that new owners of small cleaning, catering, orderly and laundry businesses will no longer have to keep on existing workers.
The Employers and Manufacturers' Association says employees still have rights and protection.
Chief executive Kim Campbell says the labour laws have been making it impossible for firms to continue in their business because they were taking on staff they did not hire on conditions they had not set.
The Service and Food Workers Union said the move is nasty as businesses would be able to pick up and drop people at will to undercut their competitors.
But Labour Minister Kate Wilkinson says she is not expecting any job losses or the rights of employees to be taken away.