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Small company staff redundancies set to rise as downturn deepens

A business organisation has warned that spiralling costs and a lack of credit is forcing some small companies to consider making staff redundant in order to survive the downturn.

The Forum of Private Business (FPB) says that its legal advice line experienced a 68% increase in calls on employment in September. Redundancy is the main issue for FPB members, with 12% of total calls relating to redundancy situations.

The organisation says that it is receiving a growing number of reports from its members that banks are tightening their lending facilities, and that costs, including utilities prices, are getting out of control. In addition, more than 50 new regulations came into force on 1 October 2008, including an increase in the minimum wage, additional maternity and adoption leave rights and regulations on occupational pension schemes.

According to the Office for National Statistics (ONS), the number of people claiming unemployment benefit in August increased at the fastest rate for 16 years, reaching 904,900. The ONS recorded a total of 1.72 million people out of work - an increase of 81,000 from the previous quarter. However, in the three months to August, the number of jobs available decreased by 56,900 from the previous quarter, to 613,200.

The FPB is advising small companies to seek advice on matters of employment early. More than 28% of calls received by the helpline in September related to disciplinary and conduct issues, followed by employee absence, which comprised 8% of calls. However, some members have contacted the FPB’s legal advice line only when the matter has progressed as far as a disciplinary hearing.

This was posted in Bdaily's Members' News section by Ruth Mitchell .