The Government believes that the change will prevent an anticipated skills shortage (see previous article in Knowledgebase).

Currently, employers can retire a worker at 65 if they choose to do so. However, the Government has proposed abolishing the default retirement age, meaning businesses could be forced to keep on employees over the age of 65 indefinitely.

The FPB believes this could threaten the future of SMEs across the UK and lead to a raft of painful and costly legal disputes.

The FPB put this view forward in response to the official consultation on the issue, which closed on Monday 1 February.

FPB chief executive Phil Orford said, “I don’t think anyone would dispute the valuable contribution older workers make to the economy. With people living longer and healthier lives, the skills and experience older people can bring to the workplace are widely recognised.

“However, at the moment, there is nothing to stop anyone from working beyond 65, providing it suits both parties. The current law works perfectly well, so why tamper with it?

“By scrapping the default retirement age, all the government will do is take yet more control away from business owners, add even more complexity to workplace law, and open to door to costly and painful employment tribunal cases.”

The FPB has set out its views on the issue in response to a Government consultation, which closes today (Monday 1 February).

In its response to the consultation, the FPB emphasised the need for small firms to be able to plan ahead, especially during times of economic uncertainty.

The FPB also pointed out that just last year, the Government defended the default retirement age in the High Court, arguing that it brings numerous social benefits.

The FPB’s response reads, “Removal of the default retirement age will limit some small businesses by removing the tools that help them to plan for the future.

“Most employees are certainly competent enough to work beyond the age of 65 without a significant deterioration in their abilities. However, for those employees not willing to leave voluntarily, there will eventually come a time when the needs of the business will have to be considered.

“In the absence of a default retirement age, the only viable option available to an employer is a capability dismissal based on the declining competence of the worker. We believe this would be an undignified and humiliating end to a career for most staff.”