Officials believe that ministers will end the employment code, designed to ensure that companies who take over public sector contracts provide pay and conditions for new staff broadly comparable with that of the former public sector staff they work alongside.
Dave Prentis, general secretary of Unison, said the move heralded a "race to the bottom", adding: "This is another attack on mainly low-paid women workers. The two-tier code is essential to stop companies that are in the process of bidding for public sector contracts, competing on how low they can pay their staff. Even companies that bid for these contracts are privately worried this will result in a race to the bottom in pay and conditions."
Unison said it understood the government would announce new Principles of Good Employment Practice, which it maintained would be purely voluntary.
Mr Prentis said: "With no enforcement mechanism, these will have no bite and are merely wishful thinking on the part of the government.
"This move will hit many low-paid women workers hard, particularly catering and cleaning staff, and we are calling on the Government to carry out an equality impact assessment as a matter of urgency."
Paul Kenny, general secretary of the GMB union, said: "It says something about the priorities of the government that they attack the rights of low-paid workers while they have done absolutely nothing about bankers' bonuses. It is a disgrace."