A shake up of employment law has been revealed by Business Secretary Vince Cable during a speech to the EEF.

The reforms are designed to help businesses to grow and flourish, by improving the way employers take people on, manage disputes and let people go. Proposed reforms to tribunals alone are expected to deliver £40 billion to employers in benefits.

Some of the measures proposed include the introduction of a consultation on 'protected conversations', which would allow employers to openly discuss poor performance with employees, without fear that the conversation could be used as evidence in a tribunal.

A call for evidence has also been made on the length of time required for a consultation period on planned redundancies as a direct response to the Red Tape Challenge - this currently stands at 90 days, but the Government is considering reducing this to 30.

As part of the response to the 'Resolving Workplace Disputes' consultation, the Government has also committed to requiring all employment disputes got to the Acas to be offered pre-claim conciliation before going to a tribunal, and from April 2012 increasing the qualification period for unfair dismissal from one to two years.

A consultation on the introduction of fees for anyone wishing to take a claim to an employment tribunal is also due to be published by the Ministry of Justice. Meanwhile, small businesses look set to benefit from a proposal to introduce compensated no fault dismissal for micro firms, with fewer than 10 employees.

The proposals have been met with mixed reactions, prompting Cable to defend the measures against claims that they will instil fear in employees. Speaking on BBC Breakfast, Cable said:

"We are not trying to create an environment of 'hire and fire' and insecurity, absolutely not. That is not the way we want to proceed, in current conditions that would not be helpful at all."

"But we also want to create an environment in which entrepreneurs want to start businesses, expand, take on staff and feel confident that they can do that and, if they run into difficulties with a particular employee, they can have a conversation with them without worrying they are going to be taken to a tribunal."

Business groups the CBI, EEF and the British Chambers of Commerce (BCC), have all welcomed the proposals. Commenting, Dr Adam Marshall, director of policy at the BCC said: "Employment regulations often create uncertainty for businesses and act as real barriers to confidence, growth and job creation. The BCC has long called for a reduction in red tape and a shake-up of the Employment Tribunal system, so we welcome the government's reform proposals, which respond directly to business concerns."