The proposals, under new Government plans, would double the time in which a new mum on leave could get her job back.
Currently, firms have to hold a woman’s job open for up to six months maternity leave.
After that if it is not “reasonably practicable” to keep the post open they can offer a “suitable alternative”.
Business bosses fear the change – drawn up at last month’s National Policy Forum in response to union demands that there be “no detriment for mothers coming back to work” – could cripple small firms.
The plan has also caused Cabinet splits. Labour deputy leader Harriet Harman backs it, but Business Secretary John Hutton fears the law could put too much pressure on companies.
British Chambers of Commerce director general David Frost said: “Most firms want to be accommodating, but keeping a post open for this period of time is simply not possible.”
Ministers are already preparing to lift paid maternity leave from nine to 12 months next year. Mothers will have to take the first six months themselves, but will be allowed to transfer the second half of their leave to the child’s father if they wish.