The vote came as Lindsey Hoyle, the Labour MP who is heading up the Bill, accused government whips of "shameful" and "very strange" tactics to block the Bill as fears were voiced over whether employers could afford a rise in the current climate.

Under current legislation, employers have to offer a week's pay for each full year of service for employees aged below 41, and a week and a half for those above that age.

However, the limit is capped at £350 a week – an outdated figure according to Hoyle and trade union Unite, which has backed the bill.

In addition, the cap is linked to inflation via the Retail Price Index, which could suffer deflation during the recession meaning that theoretically, the payouts could decrease.

Opening the debate in the Commons, Hoyle said: "It is strange that the top of the tree, the management… are the ones who get paid off."

Unite assistant general secretary Tony Burke said it was a "disgrace that UK workers can be so cheap to sack".

He added: "The problem the government have is that the Bill has wide-ranging support from working people and it would be a popular move which will show that Labour is listening to working families rather than the CBI."

Also see: Government under pressure to raise minimum redundancy pay