Small businesses warn they will have to lay off staff as the weight of employment legislation, the credit crunch and soaring utility costs take their toll. Members of the Forum of Private Business have been inundating the association’s legal advice line about employment issues. Calls soared 68% in September and 12% of those related specifically to the issue of redundancies.

Some 35% of callers to its member helpline – a separate service to its legal advice line – also expressed grave concerns about employment issues and 9% feared making redundancies. They were unable to cope with the raft of new employment laws that had come in, they said. More than 50 new employment regulations were introduced on 1 October, including a 3.6% increase in the minimum wage.

Redundancies were inevitable, said FPB policy representative Matt Goodman. “For the smallest businesses, particularly those with fewer than 10 employees, recruiting and retaining the right staff is one of the most important processes involved in successfully growing a business,” he said. “Relationships are more personal, therefore the disruption is greater when it comes to letting people go."

A spokesman for the Association of Convenience Stores added: “Retailers looking to make cuts may struggle to find any. Now is not the time to pile more costs on retail employers.”