Small business bosses are afraid to make redundancies because they fear staff reprisals, new research reveals.

According to business insurer Premierline Direct, just under two thirds of bosses in small and medium-sized enterprises (64%) think staff would be out for revenge and 55% think employees will try to increase their compensation payouts.

Of business owners being sued by staff, 73% claim it is because their business does not have the necessary funds to afford payouts and 36% worry they did not follow the correct redundancy procedures.

More than a third of respondents who let staff go (37%) did not seek legal or HR advice and almost half (49%) do not have legal protection insurance.

Chris Little, managing director of Premierline Direct, said: "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 they may not have experienced before. What bosses may not realise is there is plenty of help available to guide them through the process including cover provided through their business insurance policy."