Business Secretary Vince Cable announced a call for evidence on the change as part of a package of measures aimed at removing "barriers to growth" during a speech to manufacturers' organisation EEF.
Further changes are announced in the Government's response to its consultation on resolving workplace disputes (63-page / 365KB PDF). These include increasing from one to two years the length of service an employee needs before that person can bring an unfair dismissal claim, and an overhaul of the employment tribunal system which the Government said could deliver £40 million a year in benefits to employers.
The Government will also consult on the introduction of 'protected conversations', which industry body CBI said would "allow employers and employees to have frank discussions about future plans". Other possible changes include the streamlining of criminal records checks and the TUPE Regulations, which protect the rights of employees when a business is taken over by new owners.
"Our labour market is already one of the most flexible in the world, but many employers still feel that employment law is a barrier to growing their business. We're knocking down that barrier today," Cable said in his speech.
However Selwyn Blyth, an employment law expert with Pinsent Masons, the law firm behind Out-Law.com, questioned whether the changes would lead to promised economic growth.
"The Government needs to be seen to be doing something about rising unemployment, and lack of confidence among employers to hire staff is given as a reason for the high level of unemployment," he said.
"However this all seems like a smokescreen for the economic reality of why employers are reluctant to hire staff at the moment. Introducing new concepts such as 'protected conversations' into the employment relationship are the last thing employers need, and runs contrary to the Government's red tape reduction agenda."
He added that the Government's forthcoming consultation on its proposals would not change the fact there would inevitably be "expensive, time-consuming litigation about what is covered or not covered".
The current rules for collective redundancies require a 90-day minimum consultation period where more than 100 redundancies are proposed. The Government said it would seek views on whether this "acts as a barrier to employer flexibility in the labour market", and whether a reduction could affect employees' access to alternative employment or training.
Proposed changes to the tribunal system include the introduction of fees for anyone wishing to take a claim to an employment tribunal. The Ministry of Justice (MoJ) will consult on the best method of doing this, with separate fees to lodge a claim then take it to a hearing proposed. Alternatively a threshold could be introduced, so that those seeking a tribunal award of more than £30,000 will have to pay more to bring a claim.
In addition, all claims will have to be lodged with Acas for a compulsory attempt at mediation before they can be referred to the tribunal service.
The Government also proposes to simplify the existing dismissal process by introducing a system of 'compensated no fault' dismissal for firms with less than ten employees. This will "slim down" the regulatory burden on these micro firms, it said.
However, Cable insisted the proposals were "emphatically not" an attempt to give businesses an "easy ride" at the expense of their staff.
Employment law expert Selwyn Blyth said that if it was true that the service requirement before an unfair dismissal claim could be brought was preventing employers from hiring new staff, there would have been a rise in unemployment when the requirement originally dropped from two years to one year in 1999.
"Instead unemployment dropped for several years after that, so there is little statistical basis for what the Government is asserting now," he said.
Blyth also questioned how 'protected conversations' would work in practice.
"When it comes to poor performance, currently the more frank an employer is the better as it is often a lack of management intervention that is the problem. So how does a 'protected conversation' help? The employer will want to be able to refer to these conversations, which is the opposite of what the Government is suggesting. So how this would work in practice, and its link to job creation, is unclear," he said.