A fifth of UK bosses are planning to make employees redundant in order to accommodate the introduction of the National Living Wage (NLW), according to HR experts, Croner.

The research carried out in March this year by Croner’s pay and benefits specialists also reveals that 20% will be using more self-employed workers as opposed to employing people directly. However only 10% of businesses said the legislation would affect their recruitment plans.

A third of businesses replying to the survey said that the NLW will have a negative impact on their business, with many of them already seeing an increase in wage and supplier costs.

Viv Copeland, Head of Reward at Croner says: “The introduction of the National Living Wage has without doubt been one of the biggest game changers in recent employment history. It is estimated that around six million workers will benefit from the new legislation which is good news for them, but we wanted to know what impact this will have on employers which is why we carried out the research.

“The biggest challenge emerging from this research is how employers will fund the wage increases, especially where the costs cannot be passed on to customers. This is particularly an issue in the care sector, who admitted they would have to make redundancies in order to cope with the rise in wage costs.

“On a positive note 60% of respondents said they would be reviewing their overall pay and grading structures to ensure that relative pay remains fair and differences justified.”

The research features in Croner’s latest briefing: The National Living Wage Research into Strategies. The briefing also highlights practical ideas for coping with the rise, including changing pay reference periods and managing poor performance.