In future, employees may have to work for longer before making a claim for unfair dismissal.
The proposal could form part of a series of recommendations put forward by the government’s new adviser on encouraging small firms, Lord Young.
Lord Young, the former trade and industry secretary, has been appointed enterprise adviser to the Prime Minister and has been given the task of overcoming government’s “institutional bias” against small business.
His remit, as set out in a letter written by David Cameron, is to produce a review of the regulatory red tape that affects smaller enterprises and of the way that government departments interact with SMEs.
Mr Cameron wrote: “Governments have been cavalier in introducing regulations and requirements, wrongly assuming small business owners can just take them in their stride, when in fact it can make their lives impossible.
“This government must and will be different. I would like you to write a brutally honest report that forensically examines how government departments interact with and affect small businesses.
“It should make specific recommendations to make this government the most enterprise and small-business friendly ever.”
One area where changes could be made is in cases of claims for unfair dismissal.
At the moment, employees can lodge a claim for unfair dismissal after a year in the employ of a business.
That could be extended to two years in an effort to tackle the problem of spurious complaints.
In addition, Lord Young has been briefed on examining ways of making it easier for small firms to pitch for and land government contracts.
He will also look at the level and suitability of support offered small UK firms that wish to enter the export market.