The not-for-profit Forum has said while cash may be in short supply for many SMEs, festive frolics don't have to cost the earth.

The Forum's Chief Executive, Phil Orford, said: "The benefits of an annual get-together cannot be underestimated. They encourage communication, motivate staff, and reward them at a time when other perks, such as pay rises and bonuses for many just aren't an option."

The Forum has come up with 10 top tips for employers:

1. Ask your staff
If you have to cut the Christmas party budget, explain this to your staff, most of them will understand that times are tough. Also ask them for alternative ideas that do not cost much money. Most people will be impressed that you have even asked. Once you have a few good ideas, put them to a vote.

2. Host a low key event
You do not have to have an expensive Christmas party with a three course meal and a free bar. Nor do you have to rent out a venue, if you have the space to do it in your own premises and it is an appropriate venue.  An informal get together with a few nibbles, with staff invited to bring a bottle, is better than nothing.

3. Make your own entertainment
For free entertainment that gets everyone talking, you could hold a festive quiz and donate a present as the prize for the winner. Be creative with the budget you have but just make sure you have fun!

4. Go for lunch
Who says that the Christmas get-together has to be in the evening? Rather than the Christmas party and an evening meal, you could take staff out for lunch at a local pub or restaurant. It will be cheaper than a traditional party, but your staff will still feel they've been out.

5. Use discount websites
If you want to take your staff out for a meal or drinks, be sure to look for the best price. You can use group deal websites to source big discounts for staff nights out.

6. Say thanks
Showing staff you recognise their hard work can mean more than any gift or monetary bonus. Take the time to go round your place of work and talk to every member of staff. Talk to them about their plans for the holidays and thank them personally for their hard work. ‘Thank-yous' still go a long, long way as it shows hard work has not gone unnoticed.

7. Recognise exceptional work
Make people feel valued by giving awards for exceptional work in your organisation, for example, the person who's made the most sales or the most punctual time keeper.

8. Secret Santa
Allow staff to arrange a ‘secret Santa', where participants each buy a present for one other member of staff. This won't cost you anything.

9. Wind down
If it won't affect productivity too much, you could allow staff to go home a couple of hours early on the last day before the Christmas holidays, especially if this time would usually have been taken up by the Christmas party. Whether its young workers eager to get to the pub, or those with children eager to get home – this will be widely appreciated.

10. Deck the halls
Allow staff to get into the festive spirit by decorating the office with Christmas decorations. Employers could even invite people to bring their own in to further save on costs.
Added Mr Orford: "The important thing for employers to remember is that being seen to do something for staff at Christmas, however small the gesture, is far better than nothing at all.
"In these tough times, small businesses need to retain their best staff. Motivated workers are a valued commodity and help businesses perform better."