Despite the recent rise in the unemployment rate research has suggested that small business owners are afraid of making redundancies for fear of being sued for unfair dismissal.
According to research conducted by business insurers Premierline Direct small firms fear the potential financial consequences of redundancies, with limits on awards for unfair dismissal and redundancy payments increasing earlier this year.
Of those small business owners concerned about being sued by workers over 70% said that their firm did not have necessary funds to pay out compensation and 36% said would be worried they hadn't followed the correct procedures.
37% of small businesses that have had to let staff go did not seek legal or HR advice beforehand, leaving themselves open to potential legal action.
"Redundancies have increased considerably in line with the economy's performance and many business owners are facing the prospect of having to make staff redundant; something which they might not have experienced before," said Chris Little, managing director of Premierline Direct.
www.ukba.co.uk
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