The procedures small businesses must follow during disputes are often too complicated, it has been claimed.
Matthew Knowles, spokesperson for the Federation of Small Businesses (FSB), said that smaller companies tend not to have the resources that larger firms have to deal with such disputes, sometimes forcing them to settle before they go to tribunal.
"Regardless of fault, it usually works out cheaper for the business to settle than it does to pay for the legal advice and everything that goes with it," Mr Knowles claimed.
Arguing that the current system is "inflexible", the expert said that the FSB was looking for the amount of "jargon" used in the existing procedures to be reduced to ensure a greater level of understanding among those involved.
According to the Tribunals Service, the number of employment tribunals rose by 15 per cent in 2006-07 to 132,577.
During the previous year the figure stood at 115,039.
