A small business support group has hit out at plans to abolish the default retirement age.

The coalition government has said it intends to press ahead with the previous administration’s plans to remove an employer’s option to retire staff at the age of 65.

If the proposal goes ahead, businesses could be forced to start keeping on staff indefinitely in just over a year’s time.

The Forum of Private Business believes that this 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 it.

If the default retirement age is scrapped, business owners will be forced to keep on workers past the age of 65, whether they want to or not.

The forum believes this 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”l employment tribunals, as an employers’ only means of ending employment will be through a ‘capability dismissal’ based on the declining competence of the worker.

In recent survey, just four per cent of the forum’s members felt removing the default retirement age was justifiable.

Forum spokesman Chris Gorman said: “We are by no means disputing the valuable skills and experience older people bring to the workplace.

“Many small businesses are happy to keep on members of staff well into their late 60s and 70s - indeed, many forum members themselves are well over 65.

“However, removal of the default retirement age will cripple some small businesses by removing the tools that help them to plan for the future…

“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.”

Forum member Stuart Mitchell, of Derbyshire-based Machine Building Systems Ltd, said: “Many an employer has allowed someone a dignified retirement because although they were not really up to the job any more, it was only a matter of waiting a few months or a year, and the problem would resolve itself happily.