Small businesses face crippling legal fees and compensation pay-outs if the Government fails to implement a common sense approach to its family-friendly policies, the Federation of Small Businesses (FSB) said last night.

It said its members did not have the resources to cope with employment legislation coming into force on April 6 which requires employers to consider seriously requests from parents wanting to work more flexibly.

The concerns came on the day the Government launched a publicity campaign highlighting the benefits to employers and employees of embracing the legislation.

Trade and Industry Secretary Patricia Hewitt said: "I think we ought to say to employers who have simply never thought about it, 'Look, this is actually something that can benefit your business as well as individual employees'."

But Peter Troy, of the Darlington branch of the FSB, said: "This could be potentially very damaging. It is another factor that small businesses have to deal with."

Clive Owen, of Darlington accountants Clive Owen & Co, said: "As a generalisation, small and medium-sized companies by their very nature are more sympathetic to family problems as they often work alongside their employees.

"The new legislation puts immense pressure on such businesses, as it is far more difficult for them to find cover for short and medium term absences."

However, the CBI/Mercer Employment Trends Survey 2002 showed 96 per cent of employers offer at least one flexible working arrangement, while 66 per cent offer three or more.

A number of firms, including Darlington Building Society and Durham County Council, have already put in place measures to smooth the introduction of the new employment rights.