Almost half of firms surveyed by a leading employers' group have reported sacking staff for drug use.
But the Northern Employers and Manufacturers' Association is concerned a similar proportion may be breaking the law over how they test for drugs, and is calling for clearer legislation.
That follows a case in which two workers who tested positive for cannabis use while on a drugs rehabilitation programme were found to have been sacked unlawfully, as the Employment Court did not accept their boss had just cause to test them.
Association employment services manager David Lowe says one was tested after tripping over a loose floor tile, and the other after his company's managing director thought he smelt cannabis on him at a social function.
The survey found 56 per cent of 149 participating firms had disciplined staff for drug use and 46 per had sacked workers for that reason.
Mr Lowe said the association was "truly alarmed" by the results.
"We had heard about the extent [of drug use] but never dreamt it was going to be like this."
But he was also concerned at a lack of clarity in the law apparent from a finding that 45 per cent of employers may not be complying with legal requirements in the way they go about testing for drugs in workplaces.
He said employers were prepared to do their best to minimise workplace accidents, but needed support in ensuring drug use did not put staff at extra risk or impair productivity.
Cannabis and methamphetamine were the most common substances picked up by workplace testing.