Zombie firms, real people: How employers can support mental health amid redundancy fears

By Chris Britton, People Experience Director at Reward Gateway | Edenred

New research suggests UK unemployment is expected to increase this year, as financially fragile ‘zombie’ companies struggle to adapt to growing cost pressures.

Zombie businesses are defined as low-productivity organisations that build enough income to survive but lack the capacity to grow or adapt in difficult circumstances.

And with higher interest rates, rising energy bills and an increased minimum wage on the horizon, it’s clear that 2026 will be a year that challenges companies to stay afloat.

The human impact of redundancy fear

Falling business confidence, mounting costs and market volatility all put increasing pressure on workplaces, which, in turn, negatively impacts employee wellbeing.

Our research shows 34 per cent of employees fear being made redundant if their company is struggling, with 25 per cent feeling under increased pressure and 18 per cent worrying they will miss out on a promotion even if they meet the criteria.

With constant news of redundancies due to rising employment costs, it’s no surprise that many workers fear for their jobs and livelihoods.

Ultimately, their wellbeing is at risk, and this not only impacts their productivity but can also lead to absences due to burnout, stress and sickness down the line.

There is also a clear emotional impact on the remaining ‘survivors’ after a round of redundancy has taken place. Many feel guilty about getting to work while their colleagues don’t. Trust in the businesses diminishes and, in hand, morale – especially if the process was handled poorly.

When remaining employees are given increased workloads, they may also feel mounting stress, burnout and low job satisfaction.

How to protect employee wellbeing if potential redundancies are a risk

• Employers must prioritise wellbeing to maintain performance, protect retention and support people through economic uncertainty.
• Clear and honest communication during financial difficulties is imperative.
• Transparency builds trust, even when the news is hard, and helps employees prepare for and consider their options in worst-case scenarios.
• Make sure you share the reasons for these business changes, their impacts and timelines, information about redundancy pay, the decision criteria and mental health resources as early as possible, so employees feel informed.
• Creating a single, well-signposted support hub is a useful way to centralise this information so staff aren’t forced to chase details and can access everything they need at the click of a button. This could look like a secure SharePoint page or even an internal microsite.

For those feeling like they might be ‘next’, a clear plan for the future is key.

Plan follow-up communications tailored to remaining employees. This gives you the chance to address workload redistribution and acknowledge emotions and concerns openly. If an employee understands the organisational priorities for rebuilding the business and, in turn, developing their role, this will help address anxiety and boost motivation.

Provide emotional support through Employee Assistance Programmes (EAPs), which support staff with issues like stress at home or work, financial difficulties, and family and relationship concerns. Wellbeing benefits and talking therapies are essential offerings, helping all employees manage conflicting priorities, difficult emotions, and common life stressors.

Arranging instant access to qualified counsellors within 24 hours of redundancy notifications is critical for preventing emotional spirals in the first few days and for preventing backlash from falling on HR or management.

Additional outplacement, like professional career transition coaching, is another strong benefit to consider to further support your workplace. This can include guidance on career strategy, CV writing, and interview preparation, helping leavers regain confidence and momentum.

Outplacement specialists should be brought in before exit day so that employees can get the support they need early and begin their next steps while still employed.

Economic headwinds may be unavoidable in the coming months, but unnecessary human fallout is not. Businesses that survive the year ahead will be those that recognise supporting mental health through uncertainty isn’t a ‘nice to have’ – it’s a leadership imperative.

Disclaimer: The views expressed in this opinion piece are those of the author and do not necessarily reflect the views of The Well Crowd. This content is for information and discussion purposes only and should not be taken as medical, health, or professional advice.