The Council of Trade Unions says a meatworks in Marton in the central North Island is putting pressure on workers to accept individual contracts with longer working hours and less pay.
The CTU says because of this, union membership at the company, CMP Rangitikei, has fallen from 80% to 35% over the past month.
CTU President Helen Kelly says the company locked out workers after they refused to accept reductions in pay and conditions without the cuts applying to management as well.
Ms Kelly says the situation is unfair and extremely concerning.
"You've got seasonal and vulnerable workers at the meatworks being rung by the employer, and being told 'this is it, take the deal, come back or we'll lock you out'. And many workers have decided it is just too big a risk.
"It's a sign of a very poor employer which uses that sort of tactic to force that on them."
The remaining union members will continue picketing the meatworks on Wednesday.
The company said on Friday that "the exodus of employees to the new individual contracts reflects their understanding of the reality of much fewer lambs being available for processing and the effect this is having on the financial viability of the plant."
"By working the 40 hours a week in the peak season under the new agreement instead of 35 hours previously , they would still be able to earn close to their previous pay while helping to secure jobs at the plant," said Darryl Mackenzie, CMP Rangitikei's general manager.
