BBC Radio 4's Money Box
New rights begin in October for women expecting a baby or waiting to adopt a child from next April but some small businesses say it will hit them hard.
Women's paid maternity leave will be extended from six to nine months and even small employers will now have to keep their job open for a year.
Mark Linton is a director of a small, Birmingham-based events management company.
He set up almost exactly a year ago and his firm consists of another male director and two women whom they employ.
He hopes to take on two more staff within the next year but like many small business owners he is concerned about the new responsibilities he will face if his employees go on maternity leave.
"I think it could be quite drastic," he told BBC Radio 4's Money Box.
"It's difficult because you have to balance the fairness of it all. It will be detrimental to the organisation if we have to leave the post open for a year."
Leave rights
There are other aspects of the Work and Families Act which worry small business organisations.
At the moment female staff must have worked for nine months to qualify for more than six months maternity leave.
From April, every woman will be eligible for a year's maternity leave from the moment they begin employment.
Women will still have to work for around nine months to get Statutory Maternity Pay.
Matt Hardman of the Forum of Private Business said larger firms can quite easily absorb the costs, but warned: "The danger with this legislation is it's the smaller firms who are going to be hit hardest."
There is already some help available.
Rachel Roe, a legal adviser with Working Families, told the programme companies already receive 4.5% extra in their government compensation for the disruption caused when staff have to be temporarily replaced.
"Maternity pay is fully funded by the government," she said. "It's not out of the small employer's pocket unless they choose to top it up. There's an additional 4.5% in there to reflect the additional administration costs."
Employers' benefits
The act does contain provisions which should benefit employers as well. Staff will in future have to give eight weeks notice of when they intend to return to work, more than double the current requirement.
Jim Fitzpatrick, employment minister at the Department of Trade and Industry, told the programme: "We have introduced new ways of paying, time allowances when it ought to be paid and keeping-in-touch days to encourage staff to be able to keep in touch with their company.
"We're always very sensitive about the impact on business generally and small businesses in particular."
But there are concerns the new legislation may backfire.
Three quarters of company directors said they thought the new law would discourage employers from taking on women of child bearing age, in a recent survey.
It has been estimated that around 10m women workers fall into this category, a third of the workforce.
Any reluctance to hire them would be a clear breach of sex discrimination laws.
Rachel Diney, head of discrimination at law firm Beachcroft, said: "I can see that there's an argument that inadvertently this will have exactly that result.
"I suspect that those employers who won't comply with the law and have been evading it will persist in that practice."
The government however says there are already adequate safeguards to stop this sort of discrimination.
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