Conciliation service Acas is to cut both staff and offices in the wake of a government decision to slash its budget by 16% over three years.
In a spending review settlement that marks a heavy blow for the service, the current budget of a little under £46m will be cut by about £7.3m by 2008.
Acas is reviewing its entire operations to find savings, but hopes to protect frontline services, such as tribunal claims, employment advice helplines, and funding the work of the Central Arbitration Committee, which adjudicates union recognition disputes.
Initial savings will be found through the loss of 120 posts, and the closure of some of its 30 regional offices.
Acas chairwoman Rita Donaghy, said the organisation was carrying out a comprehensive review of all its services to make its business as efficient as it could be.
"Changes will include streamlining the number of smaller offices we have and reducing some posts," she said. "However, we will continue to provide the same frontline services we always have - as well as some new ones - and customers should not see any reduction in levels of service."
Acas' work has expanded fast in recent years as employment law has grown in both volume and complexity. But the service continues to enjoy wide support among employers and unions for its strict neutrality in tackling disputes.
Steve Farley, national officer with civil service union PCS, which represents many Acas staff, said the cuts were likely to impact its front-line services. He said staff already struggled to achieve settlements in the six weeks allotted for conciliating employment tribunal applications.
"One of the proposals for efficiencies is the downgrading of conciliation officers' roles, and that is not likely to help keep the tribunal caseload down."
He also pledged to oppose any further moves by Acas to expand its income-generating work.
"Our members do not like hawking training services around the private sector because they feel it compromises independence," he said.