The government is set to change the employment tribunal system to try and deter employees from bringing actions.

Under proposals announced by the trade and industry secretary, Stephen Byers, people bringing “unreasonable” cases could have costs of up to £10,000 awarded against them.

And the deposit paid in weak cases will rise from the present £150 to £500. Tribunals will also be given the power to strike out ill-founded claims which have no real chance of success.

A new arbitration scheme will also be introduced by ACAS to deal with unfair dismissal claims.

Byers said: “People pursuing a claim with no reasonable prospect of success, or who indulge in time-wasting tactics, must be prepared to face heavy financial penalties.”

But the proposals have not been well received. Legal expenses insurer Abbey Legal Protection said the proposals overlooked the needs of small businesses.

And Stephen Cavalier, head of employment rights at solicitors Thompsons which acts for unions called the proposals “unnecessary”. “Tribunals already have powers to award costs,” he said.

The number of tribunal cases has been rising by 10% or 15% over the last few years and in 1999/2000 there were 104,000 cases. The average payout has stayed at £2,500 for several years.