The government is to scrap the dispute resolution procedures it introduced three years ago for British employers and their staff.
Critics argue the current system puts pressure on employees
A new bill will pave the way for measures designed to encourage earlier and more informal resolution of grievances at work.
The new rules are expected to save employers up to £180m per year.
Workplace groups have welcomed the changes, after arguing the current framework was not acceptable.
The overhaul was recommended by the Gibbons review, which reported in March 2007, following a "root-and-branch" examination of dispute procedures.
It was commissioned after widespread criticism of the system from groups representing both employers and employees.
Under the present rules, which came into force in October 2004, employers must have formal disciplinary and grievance procedures which have at least three stages.
A member of staff must exhaust this process before taking an employer to a tribunal.
The government had hoped the number of employees going to tribunal would fall. But in fact, 2006 saw a 30% increase in the cases being heard.
The Department for Business, Enterprise & Regulatory Reform is still finalising the replacement package of measures, but has pledged not to scrap the present statutory rules until the new non-regulatory framework is ready.
The Chartered Institute of Personnel Development (CIPD) has long argued the system did not deliver what it was intended.
Mike Emmott, an adviser in employee relations at the CIPD, said he was "delighted" at the decision to scrap the existing procedures.
"They were supposed to simplify dispute resolution and allow more grievances to be tackled inside the workplace. But instead the procedures just made the situation more complicated and meant that more disputes turned into legal claims," he added.
'Access to justice'
The TUC had also campaigned for change. Sarah Veale, head of equality and employment rights at the TUC, welcomed the announcement.
"We are particularly pleased that employees who have genuine claims will no longer be caught up in cumbersome procedures," she said.
But, she added, "the new regime must protect employees' access to justice."
Employers' groups have also reacted positively. Miles Templeman, director general of the Institute of Directors, said: "The Gibbons Review made sensible recommendations and it is good to see progress."
Sally Low, director of policy and external affairs at the British Chambers of Commerce, welcomed the savings the new regime should generate.
"Workplace tribunal claims are financially damaging to employers. An average claim can amount to a staggering £9,000 when you consider the cost of an award, management time and the required legal support."