Labour is backing a bid to change the law to curb firms’ ability to lay staff off and take them back on different – often worse – pay and terms.
The practice – known as “fire-and-rehire” – has caused several industrial disputes.
A bill is now being debated by MPs that says fire-and-rehire should not be allowed unless employees are properly consulted first.
But the government has ordered Tory MPs to oppose the legislation.
The prime minister’s deputy spokesman told reporters: “There is insufficient evidence to show legislation will stop the practice or prove effective.”
Fire-and-rehire has existed for decades, but the practice has come under more scrutiny recently as more firms hit by the pandemic have used it to reduce their staffing costs.
Prime Minister Boris Johnson has called it “unacceptable” for bosses to force fire-and-rehire on workers simply to increase profits.
But the government does not plan to back Labour MP Barry Gardiner’s proposed law.
The Labour Party says it supports outlawing fire-and-rehire completely but it has ordered its MPs to support the bid to limit the practice.
The private member’s bill, proposed by Mr Gardiner, says employees should be fully consulted on any fire-and-rehire plans.
If the employees agreed to it, they could be taken on under new terms, under the proposed new law.
But if a dispute occurred between staff and a company, an independent committee would decide on whether the fire-and-rehire could go ahead, the bill says.
‘Anti-bad business leaders’
Mr Gardiner told the BBC his plan was a “practical” way to deal with the “worst excesses” of fire-and-rehire – and said the proposals could become law quickly if supported by the government.
Opening the debate in the Commons, he also told MPs that supporting his bill would help make Britain “the best place to work”, as well as “levelling up” the country, calling on the House to “show its true colours” and back his plan.
The BBC understands that government ministers have been approached to see if they will support his plan.
And one Tory MP, Christian Wakeford, supported it in the Commons, telling the House: “This policy isn’t anti-business, it is anti-bad business leaders.”
But others on the government benches have criticised the bill, with Kevin Hollinrake warning: “The road to hell is paved with good intentions.”
Tory MP Laura Farris said the rules on fire and rehire needed to be tightened up, but it had to be available as “an option of last resort” for companies facing insolvency.
The Commons debate is expected to last about four hours and the bill can be “talked out”, meaning that MPs opposing it can stop a vote happening by continuing to speak right up to the allotted finishing time for discussion.
The Department for Business, Enterprise and Industrial Strategy has been asked for a comment.