Companies considering laying off staff have been advised by legal experts they must stick to the rules or face the risk of large claims.

Following research from KPMG, and the CIPD reporting that the number of firms planning to make staff redundant has risen from 22% to 27%, David McCraith, partner at Haworth & Nuttall, said that redundancies could actually make employers' financial troubles worse.

McCraith said: "The tough conditions imposed by the economic slowdown can provide the basis for dismissal often on the grounds of redundancy. However, there has been a raft of laws introduced in recent years which means businesses must follow a certain set of specific procedures when making an employee redundant."

According to Haworth & Nuttall, last year there were more than 130,000 employment tribunals - 530 per working day. And an average payout costs employers £7,974 plus legal costs.

McCraith added: "Prevention is always better than cure and by taking action now, companies can avoid the pain and huge expense of tribunals. If any business is unsure, they must take advice - and no short-cuts."