With the national minimum wage set to breach the £5 mark for the first time from this October, a national accountancy body has expressed concern about the impact of this increase on small businesses.
An Association of Chartered Certified Accountants survey last November showed that even the existing level of the minimum wage was having a growing effect on small companies.
The national rate for adults - announced recently by the Government - will increase by 4.1 per cent to £5.05 per hour, the fifth increase since its introduction in April 1999.
A further rise to £5.35 will come into effect in 2006.
Professor Robin Jarvis, ACCA head of small business, said: "In real terms this would mean that a company employing someone working 38 hours a week, at the new minimum wage rate of £5.05, will have to pay £191.90 a week, or £9,978.80 per annum - up £395.20 from the current level of £4.85 per hour.
"Whilst this rise may not appear significant, there are other factors such as the increase in employer national insurance contributions."
Professor Jarvis added: "We would like to see the Government making an allowance for the regional and sectorial impacts of the national minimum wage.
"We would urge them to consider the size of future increases, ensuring that they only rise to levels that do not have a negative effect on employment and work practices. That outcome would be self-defeating."
The rate for 18 to 21 year olds will also go up in October from £4.10 to £4.25 per hour.
The minimum wage for all 16 and 17 years old, other than apprentices, which was introduced last October will remain at £3.00 per hour.