The changes will encourage earlier resolution of workplace disagreements in order to solve them before reaching more official routes.

Pat McFaddden, minister for employment relations, says the current climate means regulations can be a ‘big concern’ for businesses, so simplifying them will save both time and money.

‘We’re moving away from the current, rigid legal process for resolving disputes. Instead we’re encouraging employers and employees to come together and resolve their issues earlier and informally,’ she says.

The government is to put £37 million of funding into the scheme over the next three years, giving financial support to Advisory, Conciliation and Arbitration Service (Acas) to provide more conciliation and advice services.

If the system comes in place in April 2009, employers will be given a greater deal of flexibility to develop personalised arrangements for their company.

Acas will also work on providing guidance for best practice to aid these firms.

Government advice currently suggests the problem is solved informally and internally before a formal grievance is made.