The review, announced by DTI Secretary of State Alistair Darling, will look at current legal requirements, how employment tribunals work and possible initiatives to help resolve disputes more quickly. Recommendations for changes are expected to be made in the spring.
Darling explained: "We must make the employment disputes system work better, both for business and employees. By reducing the number of disputes and resolving those that do happen more quickly, we can raise the UK's productivity and ensure better employer relations. We can also cut the cost of dealing with disputes, which can be substantial."