Mass redundancies could hit smaller UK businesses, employment expert warns

·2-min read
Small and medium-sized businesses are counting the cost of inflation  (PA Wire)
Small and medium-sized businesses are counting the cost of inflation (PA Wire)

Small businesses are starting to brace for a steep rise in redundancies, a law firm has warned, amid double-digit inflation and a looming recession.

Citation, which offers health & safety and employment law services, said it had reported a 184 per cent increase in SMEs seeking advice relating to redundancies from June to July.

The firm said the healthcare industry is set to be one of the sectors hardest-hit by the economic downturn, with inflation forecast to increase to at least 13 per cent in the new year and a fall in consumer spending expected.

Hundreds, if not thousands, of workers in small and enterprises could be laid off over the autumn, according to the data. The care sector alone has seen a 164 per cent rise in businesses needing redundancy advice.

Gill McAteer, director of employment law at Citation, dubbed the situation ”the big redundancy”.

She said: “These are very challenging times for businesses, with inflation of goods and services, including the energy crisis and economic uncertainty causing worries for firms of all sizes, but in particular small and medium sized enterprises.”

Ms McAteer said that making redundancies is not always the best option for firms, as recent Office for National Statistics data showed 26 per cent of UK businesses were most concerned about inflation of goods or service prices.

“Although it is not taken lightly by businesses, as they look to build resilience, redundancy is a common measure used,” Mr McAteer said. “Whilst it can be an effective way to cut costs, there are other options out there that should be considered first.”

She added: “Not only do business leaders owe it to their workforce to look at all options before redundancy, it can often end up costing them more in redundancy packages, than if they looked at other potential options such as a temporary change in working hours, reduced hours or changes to terms and conditions.”