A report into employment laws commissioned by the prime minister has recommended scrapping the right for workers to claim unfair dismissal.

The report, which has not been made public, argues this move would mean more capable people would replace those sacked, boosting economic growth.

But some senior Liberal Democrats fear it would harm the economy. Currently, workers who feel they were unfairly dismissed can make a claim after 12 months in a job. Last year there were 236,000 employment tribunal claims - of which only some were unfair dismissal claims, with an average award for successful complainants of £8,900.

The report was was written by Adrian Beecroft, a venture capitalist and Conservative Party donor.  The coalition government has stated its committed to reforming employment laws. The chancellor, George Osborne, recently announced new measures aimed at restricting the number of unfair dismissal claims.

He announced that, from April 2011, the qualifying period for a claim for unfair dismissal would be that the individual must have been in the job for at least two years.