Business owners are feeling the pressure. Payroll and operating costs are up. Higher wage expectations are fuelled by the cost of living. Inflation is creeping up.

For many small and medium-sized businesses (SMEs), there’s a constant balancing act between protecting cash flow and keeping the right people in place.

It’s no surprise that redundancies are coming back into the minds of business owners.

Redundancy plans

33% of UK employers say they are likely to make staff redundancies by January 2027. (Acas, June 2026) This figure includes larger organisations (45%), however for local, smaller businesses, job cuts often hit harder. Teams are tighter, margins are smaller. 21% of SMEs are planning redundancies. They need to get it right.

The Acas research is echoed by LHH’s Redeployment and Outplacement Trends Report 2025-26. These findings show that 87% of HR leaders say their organisation has already made redundancies or is planning to make them in the next 12 months. This is a 14% jump compared with last year.

Smaller businesses have smaller, flatter structures. That means there’s nowhere to hide if redundancies are mishandled. When a small employer gets it wrong, everyone feels it. Morale, reputation and management time are hurt.

Are redundancies really the answer?

When a business is under pressure, it’s tempting to treat redundancy as the fastest way to reduce costs. That may be true, but is it the best way? Redundancy should never be a knee-jerk reaction.

Before you jump straight to job cuts, ask yourself these questions:

• Is the role genuinely no longer needed, or do you need to organise work differently?
• Could recruitment be paused?
• Could overtime or agency spend be reduced?
• Could someone be retrained, redeployed or moved into a part of the business that’s still growing?
• Have you reviewed your employment contracts?

‘If redundancy is the right route, the process needs to be handled properly,’ says Sarah Barrow, HR specialist with Heneom HR near Stevenage and Welwyn, Herts. ‘Consultation, fair selection, clear communication and proper documentation protect your business and treat your employees fairly. Getting it wrong can be expensive.’

The maximum “protective award” for employers failing to properly consult on collective redundancies doubled from 90 days’ to 180 days’ uncapped pay per affected employee in April 2026. It’s essential that your policies and procedures are current and fair.’

Sometimes, redundancy might be needed. A rushed, badly managed redundancy process is never necessary.

Are you planning a big decision about people?

‘Restructuring your team can be tricky,’ says Sarah. ‘You want to reduce costs yet also support your employees and build the right structure for the future of your business.

’Seeking professional HR advice early can help you understand your options, avoid costly mistakes and approach difficult conversations with confidence. It also means you can access support throughout the redundancy process and be confident that your business is fair and compliant.’

Would you like a friendly HR discussion?

Talk to the friendly HR professionals at Heneom HR. We’ll offer sound advice without judgement or jargon.