February 1 2010.

A small business support group has called for plans to scrap the default retirement age to be shelved.

The Government has proposed removing an employer's option to retire workers when they reach 65, claiming the change will prevent an anticipated skills shortage.

However, the Forum of Private Business (FPB) believes that if the move goes ahead, it could prove highly damaging to thousands of small firms.

Currently, there is nothing to stop an employee working on past 65, providing his or her employer agrees to the move.

Many businesses are well aware of the skills and experience older workers provide and are happy to maintain their employment.

However, if the default retirement age is scrapped, business owners will be forced to keep on over-65s, whether they want to or not.

This, the FPB believes, will prove a huge problem for thousands of small firms, hampering their abilities to plan for the future.

The move could also open the door to costly and painful employment tribunals, as employers' only means of ending employment will be through a 'capability dismissal' based on the declining competence of the worker.

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."