New laws governing the transfer of undertakings and protection of employment (TUPE) have been criticised by trade unions for not going far enough.
The rules, which come into effect on 6 April, have been attacked because there is no provision to harmonise the pay scales of different groups of workers.
Under the regulations, workers transferring between employers under TUPE receive their original salary, irrespective of what staff at the new company earn.
Justin Bowden, senior organiser at trade union the GMB, said it would perpetuate the existence of "two-tier workforces".
"The Government has failed to address one of the main issues that would ensure fairness and a level playing field," he said.
T&G union spokesman Dave Turnbull agreed, saying that pay harmonisation issues would cause conflict in workplaces unless it was written into law as a legal protection.
William Baxter, deputy chief executive of independent contract caterer BaxterStorey, said fixing pay rates would reduce competition in the market.
"We can attract staff because we pay better than other contractors," he said.
According to employment law firm Tarlo Lyons, the new rules also mean the outgoing service provider is obliged to provide the incoming employer with details of all transferring employees, including disciplinary and grievance actions.
The legislation will also tighten up procedures about dismissals, pension rights and situations of insolvency.
By Tom Bill
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