Labour intends to include significant new employment rights in its third term manifesto, Patricia Hewitt, the trade and industry secretary, has said.

The proposals - likely to include longer paid maternity leave and higher paternity pay - concern employers, who have warned they could have a "crippling effect" on smaller companies.

Stakeholder Response: Institute of Directors

A spokesperson for the Institute of Directors said: "The proposal to extend paid maternity and paternity leave obviously has some appeal to expecting fathers and mothers. However, the current system was only introduced last year and it would be premature to amend the legislation already. There is also the issue of cost. Would taxpayers consider it to be a good use of their money to pay fathers to stay at home for two weeks on this level of pay?"

Stakeholder Response: Forum of Private Business

Nick Goulding, chief executive of the Forum of Private Business, said: "The proposals, likely to include longer paid maternity leave and higher paternity pay, will not be welcomed by small companies balancing tight budgets.

"Smaller employers will be worried about bearing a disproportionate burden from these proposals and will view them with a sense of dread.

"In addition, small firms face high indirect costs caused by the disruption created by this sort of proposal - such as increased leave and having to hold jobs open for staff who may never return.