Secretary of state for business and enterprise John Hutton has announced that the government will be awarding up to £37 million to employment relations specialist Acas, in an attempt to prevent workplace disputes going to employment tribunals unnecessarily.

The extra funding, spread over three years, forms part of the process designed to simplify the dispute resolution system and it is thought that it will allow Acas to improve its helpline and advice services. Acas will also look to provide more services that encourage good employment relations and prevent disputes from happening at an early stage.

Hutton said that the link between successful employment relations and productivity is clear: “Early action can often prevent the need for costly and stressful tribunals, bringing enormous benefits to business and employees.

“Our new system will strike a balance between ensuring workers can protect their rights through employment tribunals while helping them to resolve disputes as early as possible.”

Acas will now conduct pilot programmes over the next year to conciliate disputes, which look set to become a claim to the tribunals, with the aim of making this service available throughout the UK in 2009.

Acas chair Ed Sweeney said: “We give the taxpayer outstanding value for money, with every pound invested in us resulting in a £16 benefit to the economy. This new investment will enable us to increase our effectiveness and spread the benefits more widely.”

These changes coincide with provisions made in the Employment Bill, currently before Parliament, which aims to cut red tape and deliver quicker decisions on more straightforward claims. Estimates show that this approach could save businesses more than £175 million a year.

The Employment Bill also proposes to remove fixed periods for conciliation after a claim is made to the tribunal, enabling Acas to get involved at any time until the tribunal reaches its verdict.