The research, carried out for the Department of Trade and Industry (DTI) by The Survey Shop, questioned some 500 human resources managers at small and medium-sized businesses.

The DTI said the survey highlighted the need for the new employment law that comes into force in October.

This will make it mandatory for all employers to have minimal dismissal, disciplinary and grievance procedures in the workplace.

BPIF head of legal affairs, Anne Copley, said although the requirement to conduct a grievance procedure before a tribunal was new, the requirement for effective workplace procedures was not.

"The change in November simply requires that these routes are exhausted before bringing a case to tribunal," she said.

"But that will only happen if employers are attuned to the need to deal properly with grievances when they arise," she added.

She added that the grievance requirements could also drastically reduce the number of tribunal claims. brought.

Copley said the new measures were likely to highlight deficiencies in human resource practices across businesses.

If the new regulations were to have a positive impact on employee relations, Copley said it was vital that companies not only have the paperwork in place, but also understand the management systems that can deal with grievances.

The survey showed that whilst eight in 10 or 84% of employers in London worry about the financial implications of bring taken to an employment tribunal, 79% were concerned with the damage it could do to their business reputation.

Story by Andy Scott