How to avoid redundancies this year

For UK startups and small businesses, the pressure is on. In an already-tight economy, an increase in employer National Insurance has now begun adding to existing financial strain, leaving many wondering how to navigate the new tax year without resorting to job cuts.

In answer, Startups is today releasing our free report on the workforce, entitled ‘How to avoid redundancies in FY26’. We surveyed a cross-sector sample of 531 UK SME founders, owners, and C-suite execs — all of whom work in firms founded in the last five years.

The findings reveal three key challenges facing businesses: managing tax burdens, balancing operational expenses, and addressing skills shortages. These pressures are forcing leaders to rethink how they operate, with a focus on preserving their teams, which 39% of respondents consider to be their most valuable asset.

Beyond the spreadsheets and forecasts, this report reveals the human stories behind the numbers. We’ll cover the tough decisions facing business owners this year, and reveal the creative solutions they’re exploring to safeguard their workforce in uncertain times.

Read on for a glimpse of the findings, or click the pop-up to view the full report now.

What’s in our free report?

From pay rises to mental health, ‘How to avoid redundancies in FY26’ uses our survey data to explore the key trends shaping the workforce this year, and discover how SME leaders can strike a happy medium in an extreme business environment.

For practical guidance, we’ve partnered with contributors from the 2025 Startups 100 Index, our list of the UK’s fastest-growing startups. These case studies offer real-world business examples to inspire, validate, and educate you.

Here’s a breakdown of the key findings:

Wage strategies

88% of businesses will raise pay for employees despite hiring freezes.

Startups has found that ‘thriving’ businesses in the UK credit their success to a talented and motivated workforce. Our report looks at why talent retention will be the focus for this year, and shares wage strategies to reward teams without risking cash flow.

Flexible working

86% of firms will switch to a new workplace model this year.

While large corporations push for a return to the traditional office, our survey finds startups are staying flexible. Startups’ report digs into the real remote work statistics, explores the latest alternative working models, and asks the experts about the ‘return-to-office’ trend.

Training and development

64% of bosses will prioritise soft skills over hard skills this year.

Technical skills form the foundation of many startups, but our report finds that growing firms are in desperate need of soft skills. We share our top tips for upskilling, and examine how the shift towards emotional intelligence in the workplace will impact L&D in the era of AI.

Employee wellbeing

More than 9 in 10 SME leaders support the Right to Switch Off.

Our data shows that business leaders care about employee wellbeing, but feel pressure to push for productivity and follow the ‘hustle-culture’ narrative. We explore how to balance growth demands with the desire for positive company culture.

Entrepreneur mental health

First-year founders are least confident about the next 12 months.

Of firms less than a year old, 13% of founders report poor mental health – higher than in any other stage of business growth. We explore entrepreneur wellbeing in-depth, and hear from successful founders on how to build resilience in the workforce and the boardroom.

Why have we released our report?

Job cuts aren’t just bad for morale; they’re also the most obvious sign of ill health in a nascent business. Just as hiring new talent can unlock new growth trajectories for your startup, losing staff can put them in reverse.

Holly Leckenby Rye, Senior People Manager at Online Care Finder Lottie who also contributed to the report, puts it best: “startups like us rely on strong teams to scale”.

Still, there is no denying that the cost of employment is rising. Company strategies are narrowing. Niche digital skills are increasingly in-demand; driving up pay and necessitating generous benefit packages at a time when employer tax bills are also surging.

That’s why our report matters. While it can’t guarantee financial security, it provides critical insights into safeguarding jobs and building a sustainable people strategy in FY26.

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