The insurance company conducted a survey that found almost two thirds of companies believe staff would seek revenge, with a further 55% fearing employees could seek legal action in order to increase their compensation payouts.

The research also found that over a third of those surveyed did not seek HR or legal advice before making cuts.

Commenting on the survey, head of legal services at the BPIF, Anne Copley, said that there were risks associated with making people redundant but if all the procedures were followed correctly, businesses should not be worried about reprisals.

"The law is not there in order to stop businesses people dismissing employees, it is there to stop them being dismissed unfairly," she said.

"A tribunal will look at how the decision was reached. Essentially, the key is whether the employees have been consulted and whether their views have been considered."

She warned that companies can be taken to a tribunal with very weak cases against the employer and that such instances were on the rise as newly redundant employees struggle to find new jobs.

In order to mitigate the risk of any recourse, businesses can sign a compromise agreement with the departing employee, in which they waive the right to dispute the decision, usually for a small incentive such as extra redundancy pay.