Small businesses will have to cope with greater staff absence at short notice under plans agreed between the Labour party with the unions.

Under the proposals, which were announced at the party's national policy forum, parents of children under 16 will be able to take unpaid leave to cope with family emergencies, such as children falling sick or preparing for major exams.

The plans effectively extend the right to take unpaid leave at short notice from those with parents under the age of six to all parents, and will affect an estimated 4.5m people.

The Confederation for British Industry warned that the move could be particularly detrimental to small businesses, which often do not have the capability to cover staff absence or the funds to bring in temporary labour.

"In the current economic climate, now is not the time to burden them with another employment regulation," said Neil Carberry, head of employment policy at the CBI.

He added that small businesses were already struggling to cope with the extension of maternity leave to 12 months.

Last year prime minister Gordon Brown also outlined plans to extend the right to request flexible working to parents of all children rather than those with children under the age of six, or 18 if the child is disabled.

Employers can refuse such requests but only on the grounds of one of eight reasons and it is estimated that over 90% are granted

Meanwhile, research from professors at the Universities of Warwick, Coventry and Loughborough have found that small businesses with fewer than 50 staff are more likely to be taken to tribunals than larger companies and twice as likely to lose the case once there.

The report suggested that failure to adhere to the letter of the law and poor documentation was more to blame than wilful bad practice.

The Federation of Small Businesses argues excessive employment legislation makes it almost impossible for small business owners to keep on top of their documentary requirements.

But the government's Tribunal Service argued that if small businesses did indeed lose more cases, this would be because the evidence was firmly against them.