The government is planning to charge employees between £150 and £1,750 to bring claims to employment tribunals, in a move which will have the effect of increasing small businesses’ confidence to hire.

The proposals aim to discourage what justice minister Jonathan Djanogly calls “unmerited and unnecessary” claims. Tribunals cost the taxpayer £84m last year, although fee waivers could still apply to people on lower incomes.

Djanogly says: “Our proposed fees will encourage businesses and workers to settle problems earlier, through non-tribunal routes like conciliation or mediation, and we want to give businesses - particularly small businesses - the confidence to create new jobs without fear of being dragged into unnecessary actions.”

Geoffrey Mead, partner at law firm Eversheds, says: “Many employers welcome the introduction of fees for those bringing claims, but they remain cautious as to how they will work in practice.

“There is a risk of unintended consequences - for example, a possible incentive for some unemployed claimants, particularly in low-paid sectors and those with high value claims, to delay finding new employment in order to qualify for fee remission.

“In addition, the consultation proposes that trade unions should pay fees where they represent claimants in a multiple set of claims. Given the significant sums involved, this will undoubtedly have an impact on their funding of such claims.”