Business leaders urged the Government today to 'fundamentally rethink' its approach to employment law to foster better relations in the workplace.

The CBI said job losses in private firms had been minimised during the recession because of good communication and 'flexibility' between employers and staff.

The business group said ministers should now build on the 'success' of workplace relations during the economic downturn, suggesting more codes of practice or guidance rather than laws.

The approach should also be applied to European Union directives, which drive much of the UK's employment legislation, said the CBI.

Director-general John Cridland said: "Traditionally when making employment law governments have tried to specify every last detail of what should go on in the workplace.

"With a strong base of employment rights already in place, we simply don't need the state telling us how to manage every aspect of basic human relations.

"The Government should adopt a simpler approach to future employment law, one which maximises choice for employers and staff and plays up the strengths of our flexible labour market.

"Good communication helped companies and employees work together to make difficult changes to working patterns to get through the recession. These lessons are particularly important now the public sector is facing similar challenges as a result of measures to cut the deficit."

Alistair Cox, chief executive of recruitment firm Hays, which helped with the report, said: "Flexibility is a key ingredient in driving future economic growth in the UK. It is also a key aspect that more and more professionals look for in their lives and careers, particularly at a time when we want to encourage employers to invest and create more jobs, despite today's economic uncertainty.

"Juggling their work commitments around other commitments in their busy lives is increasingly important to people, so giving them the opportunities to benefit from flexible working practices is key.

"Endless red tape and legislation prevents employers and employees from being able to capitalise on the vast number of benefits that flexible working offers. It is time these constraints are removed so that we can get more people into worthwhile work."

A spokesperson for the Department for Business, Innovation and Skills (BIS) said: "Evidence shows that the UK comes out favourably as a flexible labour market in European and international comparisons. But we know that some businesses have concerns about the rules imposed on them which is why, through the Employment Law Review we are looking to make targeted improvements, aiming to maximise flexibility for employers and employees.

"Where we can make legislation easier to understand, improve efficiency and reduce unnecessary bureaucracy we will. As an example, BIS is currently consulting on extending the right to request flexible working to all employees, including a proposal to replace prescriptive paperwork requirements with a Code of Practice."