The Institute of Directors (IoD) said there should be more emphasis on settling disputes in-house or voluntarily and criticised the "nothing- to-lose, give-it-a-go" mentality.
The institute said its members believed small employers in particular were under pressure to settle industrial tribunal cases out of court to avoid risks to their business, even when they felt they had a good case.
Some directors complained it was becoming too easy for workers to bring "dotty" cases. One member wanted to abolish tribunals.
The IoD said the number of tribunal claims passed 100,000 last year for the first time, a huge rise on the 38,500 cases a decade ago.
"It is becoming routine for people resigning or being sacked to turn to tribunal proceedings," said its report.
"The increasingly litigious nature of our society and the sensational media treatment of cases have encouraged a culture of `give it a go, there is nothing to lose' among applicants."
Ruth Lea, head of policy at the IoD, said: "The burden of employment regulations is now excessive for many employers and there is considerable concern about the rapid increase in the number of applications to tribunals."Reuse content