Business leaders have called for changes to speed up employment tribunals, saying that the current system is "failing" both employers and staff.
The CBI has said weak claims should be "weeded out" early on in the process and settlements should be encouraged.
The organisation also outlined how tribunals need to be made more efficient to deal with claims.
As part of the CBI's submission to the government's consultation on resolving workplace disputes, it said a "proportionate" fee should be introduced for every tribunal claim.
Since 2005 the number of claims has increased by 173%, according to the CBI, and there is also an "ever-increasing" backlog of cases.
Katja Hall, the CBI's chief policy director, said: "It's always regrettable when the relationship between employer and employee breaks down to the point where a tribunal claim is made.
"But when this happens, both sides deserve a system that is consistent, quick and keeps legal costs to a minimum. Instead, we are saddled with a tribunal system that is expensive, stressful and time-consuming for all parties.
"Surely it's in everyone's interests for cases with merit to be heard quickly and settled, while weak claims are swiftly identified and weeded out. We'd like to see more workplace disputes being resolved before they reach tribunal."
"I would like to see some compensation for employers subject to vexatious claims by serial complainants. It is not just the cost of actually going to tribunal it is the distress anxiety and management time spent on these cases that costs so much. I have been on the wrong end of a vexatious complaint and although we 'won' there was no financial compensation for us yet the complainant was actually known to the tribunal staff because she had tried it on with so many previous employers some of whom had paid up rather than go to tribunal" – Name and address withheld