The Forum of Private Businesses (FPB) has said that the EU and unions should "mind their own business" when it comes to the hiring of non-standard workers.
The organisation, which represents 25,000 small and medium-sized British businesses, claimed that the European Commission's green paper on labour law had been put forward by trade unions.
Further red tape governing the hiring and deployment of non-standard workers would present economic risk to smaller businesses that had to cope with increasing levels of regulation, according to the FPB.
The FPB's chief executive Nick Goulding said: "A significant number of our members already think that red tape relating to employment is hindering their expansion.
"The last thing they need is for their hiring of contractors, agency workers and the like to be subject to extra rules as well."
Trade unions had stepped outside their mandate as none of the types of workers covered by the paper were members of unions, the organisation said.
However, the European Trade Union Confederation said that the green paper was "long overdue" and that fair working standards across the EU were crucial for an emerging single European labour market.
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