Workers will have to pay over £1,000 to bring unfair dismissal claims, the government announced. The chancellor, George Osborne is proposing that applicants will have to cover the costs of claims – £250 for starting an action and a further £1,000 if the case goes to a hearing – which they will recover if they win.

Ministers also plan to double the qualification period for the right to claim unfair dismissal from one to two years to come into force on 6 April 2012 as part of a move to ‘increase business confidence to take on more workers’. ‘The priority of this government is to increase growth in our economy,’ said business secretary Vince Cable. ‘We have one of the most flexible labour markets in the world but there is more we can do to give British business the confidence it needs to create more jobs and support the wider economy to grow.

Cable said that the unfair dismissal rules were ‘a major barrier to taking on more people’. Over the past 18 months, the Government has started a fundamental Employment Law Review to ensure that it is ‘fit for purpose’ and ‘properly balances the needs of employers and employees’. Ministers are launching what they call a ‘red tape challenge’ looking at than 160 different cross-Government employment related regulations including the rules on collective redundancies, employment agencies, immigration checks, the National Minimum Wage and statutory sick pay.

‘Making it easier to sack people without any reason is simply a charter for bad bosses,’ said TUC general secretary Brendan Barber.