A quarter of small businesses think that employment tribunals are unfair and a further 39 per cent of firms consider the system to be very unsatisfactory according to a survey published by the FSB.

Forum Response: Federation of Small Businesses

Alan Tyrell, FSB employment affairs chairman, said: "We are extremely concerned about the lack of confidence that small employers have in the tribunal system.

"Tribunals are no longer the quick and relatively straightforward methods of solving work place disputes they once were. The huge volume and complexity of legislation means that most employers seek legal advice before attending a tribunal and so face increased costs. For many small employers these costs have become prohibitively expensive.

"We are asking ministers to consider a range of measures to tackle the lack of confidence in the employment tribunal system. Most importantly costs need to be awarded much more often against vexatious applicants, and should take into account the huge increase in the legal fees faced by both sides."

Forum Response: Institute of Directors

A spokesperson for the Institute of Directors, said: "There has been a dramatic increase in the number of applications made to employment tribunals in recent years.

"Tribunal claims can inflict financial costs on businesses, harm their competitiveness, damage employment prospects and distracts employers from running their enterprises."