Compensation caps in unfair dismissal cases have increased from £12,000 to £50,000 under legislation enacted this week.

There will also be no limit on awards to employees who blow the whistle on firms - a move affording unfair dismissal in these cases the same gravity as discrimination cases.

"We're going to see big changes in employment practice among small businesses if they are to avoid the catastrophic results of an employment appeal claim," said Chris Hill of Hiscox.