Royal & SunAlliance (R&SA) have warned companies to prepare for new employment legislation amid evidence that employment litigation is on the rise.
According to its figures applications to the Employment Tribunal have risen by over 60% to 130,408 in the last three years and 25% last year.
The situation has prompted the Trades Union Congress (TUC) to launch a campaign to raise City employees' awareness of their employment rights.
Manager of R&SA's employment practices liability (EPL) unit Mike Bird said: "Employers are having to comply with increasingly complex obligations that represent a legal minefield.
"There will be more potential for employee action and unless companies are well prepared they could face increased numbers of claims and substantial legal costs."
Last month the government outlined proposals to encourage workplace conciliation rather than litigation.
It advised employers to draw up written proceedures to deal with the problem.
An R&SA spokesman said: "Employers who have written proceedures are more likely to reach a settlement, than emplyers without written proceedures."
