National MP Nick Smith is lodging a complaint with Parliament over a "draconian" and "abhorrent" good behaviour contract which New Zealand First MPs are required to sign.
NZ First's constitution requires its MPs to pay a $300,000 fine if they are expelled or resign from the caucus, but stay on in Parliament.
Dr Smith said the clause was an affront to democracy and turned NZ First MPs into "indentured workers" or puppets of their leader Winston Peters.
"It means every time an NZ First MP votes or comments on an issue, they have 300,000 reasons why they should just parrot Winston Peters and not to speak out, even if doing so would be in the public's best interests."
Such contracts were illegal in other workplaces and would be unconstitutional in most democratic countries, Dr Smith said.
"It is a sad commentary on the NZ First Party and Mr Peters that such draconian contracts are required to maintain caucus discipline - and now to keep the government together.
"This is abhorrent... New Zealand needs MPs who are not bound by orders or instructions but whose responsibility is to act as representatives of the people."
Mr Peters confirmed all NZ First MPs signed up to such a contract and said it was completely lawful.
"When you're out there putting an awful amount of time and money ... on the line, no one is entitled to jeopardise it and just walk off without any regard to the proportionality of the vote at election time."
He said, regardless, the provision was now obsolete because of the impending passage of the so-called waka jumping bill.
That legislation - which is set to pass later this year - prevents MPs from switching parties or striking out as an independent if they are ejected from their caucus.
NZ First MP Ron Mark said he could not recall signing up to such a condition, but agreed to it in principle.
"A list MP is a list MP and they are there at the behest of the party. Quite frankly, if they can't live up to the party's expectations, they should leave."
In 2014, RNZ reported on the introduction of the condition to NZ First's constitution.
At the time, public law professor Andrew Geddis said he believed the clause was unenforceable and the courts would throw out the contract on public policy grounds.
The changes were sparked by the expulsion of Brendan Horan in 2012 after accusations that he stole money from his late mother.