A Labour Party bill that would have forced employers to pay redundancy compensation was defeated in Parliament tonight on a vote of 64 to 57.
Darien Fenton, the MP who drafted the member's bill, said an estimated 80 percent of workers had no redundancy protection written into their employment agreements.
"New Zealand workers are among the cheapest and easiest in the world to sack," she told Parliament.
"This is because there are no requirements in New Zealand law for minimum redundancy notice and compensation."
Ms Fenton said workers who lost their jobs without any redundancy pay faced devastating consequences, often unable to pay their mortgages or support their families while they looked for another job.
Her bill would have set minimum requirements of four weeks notice of redundancy, four weeks pay for the first year of employment and two weeks pay for each subsequent year up to a maximum 26 weeks pay.
National MP David Bennett said the bill was not really about workers' rights.
"The heart of this legislation is to make everyone union members -- that's what they see as the purpose," he said.
"Labour had nine long years in power and did they bring in this piece of legislation? No they didn't, they never brought it forward when they had the chance and now they're in opposition it's the best thing since sliced bread."
Mr Bennett said setting minimum requirements would hurt workers.
"Businesses would be reluctant to take people on and promote them," he said.
"And employers would stick to those minimum requirements, while workers could have negotiated better than that."
Labour, the Greens and the Maori Party backed the bill. National, ACT and United Future opposed it.