Company bosses are urging the Government to protect the right of staff to work more than 48 hours a week if they want to.
A CBI survey of 400 UK firms found that six out of ten believed that removing an individual's right to opt out of the European Working Time Directive would have a "significant or severe" impact on business.
Companies said it would also undermine their ability to meet customer needs, respond to demand or launch new commercial ventures.
The European Commission will review the individual's right to opt out by November this year, raising fears of another increase in labour regulation.
CBI Director general Digby Jones said the opt-out was the next test of the Government's commitment to labour market flexibility.
"People should have a right to say no to long hours and the directive rightly gives them that protection,Ē he said.
"But they don't want unions and politicians telling them when they can work or for how long.
"That would be over-zealous interference of the nanny state. Further restrictions on working time would be a kick in the teeth for many firms, particularly smaller ones."
Many professional staff work long hours because of willing commitment to their jobs, argues the CBI, while many operational staff would be angered by the loss of overtime. Eighteen per cent of staff regularly use an opt-out, the report claims, with the greatest use among smaller firms.
But TUC general secretary Brendan Barber says British businesses are "obsessed" with the need to make their staff work long hours.
"The Government's own statistics suggest that 2.5 million employees want to spend less time at the office, even if less hours mean less money,Ē he said.
"Many workers simply don't get a choice whether or not to work long hours - some feel bullied into staying late, for others the workplace culture means that leaving on time is seen as letting the team down."