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Ramifications from the 'credit crunch' could spark 10,000 redundancies in the financial services industry, according to the Confederation of British Industry.

Consequently, human resource expert Deminos is warning employers that unless employee contracts are "watertight" and the correct procedures carefully followed, inevitable job losses could cost companies big at tribunal courts.

Neil Atkinson, director of Deminos, said: "Redundancy is never an easy path to take for a company but there are steps to take that can make it less painful for both parties. Prevention is always better than cure and by taking action now companies can avoid the pain and huge expense of tribunals.

"It is likely that staff contracts and staff handbooks will already set out the agreed procedures for redundancy within a company. However, even if that is not the case, there are certain procedures that employers have to follow to comply with the law and to be fair to their employees."

Mr Atkinson said that an individual can only be made redundant if a business is closing completely or there is a proven less need for a particular type of job or skill within the company.

Employers are only legally required to consult with their employees if 20 or more are to have their jobs axed within 90 days. Some employers will provide expert career advice and be clear about an employee's redundancy entitlements, which varies in length of service and age. Employers should check contracts to ensure they give the appropriate notice period.

Mr Atkinson said: "By taking expert human resources advice businesses should not reach the point of tribunal in the first place. We are so confident of the advice we offer that we guarantee to pay for the cost of any defence, award and settlement of any case that goes to tribunal from a company that has followed our advice."

Last year in the UK there were more than 130,000 employment tribunals – a staggering 530 for each working day - with the average payout for an unfair dismissal costing employers £7974, as well as court costs.

Further information about redundancy can be found from Citizens Advice and Acas has an specific employer's handbook available.