The CBI has warned that new rights for agency staff, which are being discussed by EU employment ministers this week, would cost up to 250,000 jobs.
The CBI says that a new EU directive would hurt firms' flexibility
The employers' group says it is "very concerned" about the effects of giving agency staff the same rights as full time employees.
It surveyed 500 firms to find out what they would do if such a law came in.
The Unite union will call for tougher laws to protect agency workers at this week's TUC conference.
"As proposed, the directive would seriously undermine the flexibility that temps offer to firms, hurting the economy and making them far more likely to rely on overtime flexibility from existing workers instead," said the CBI's John Cridland.
But Unite is concerned that temporary workers are being used as a replacement for permanent staff.
"There has been a decline in traditional, high-quality, reasonably paid jobs. This has been substituted with casual labour," said its general secretary Derek Simpson.
"It's estimated that more than one million people are now employed on temporary and agency contracts, which means they have no job protection, are not entitled to sick pay or paid holidays and are subject to lower rates of pay," he added.