Clegg (pictured) made the announcement when he met with small business leaders to announce a new system of regulation "designed for busy, working people".
He said: "Employers tell us they're afraid to have frank discussions with staff ... for fear of those exchanges being used against them unfairly, should a dispute end up at tribunal."
Business secretary Vince Cable will be announcing employment law proposals including a law on "protected conversations" to enable employers to have these frank conversations, including the discussion on retirement, Clegg said.
"We want to give them the confidence to be open about performance, about retirement with their employees. If you speak to many employers, they value older workers massively. I don't think there is some sort of in-built prejudice against older workers at all."
He admitted that the debate over regulation had been polarised around two extremes, which he said was not helpful.
"On the one hand there is the idea that it fixes every problem. Previously, the approach has been 'when in doubt, legislate'. We saw it in public services, in the criminal justice system and, on average, British businesses were lumbered with six new regulations every working day. Thousands of different rules were left on the statute books - because new rules are free; they're easy; they make ministers feel in control," he said.
"On the other hand, you have the deregulation diehards who say we should scrap it all. They oppose regulation vehemently; on principle. [They think] the state has no business restricting business, and all we need to do to get the economy growing again is tear up the rule book; scrap environmental protections, workers' rights, consumer rights and, hey presto, we'll get business booming.
"Of course deregulation plays a role, but supply side liberalisation is not the be-all-and-end-all for growth. There is simply no evidence that - on its own - it is enough. So both extremes are ridiculous. And I'm not interested in a false debate about 'how much' regulation; I'm interested in what works."
However, TUC general secretary Brendan Barber said the changes were "another example of the Government putting the right to make a fast buck before our health and safety and our lives", although he conceded: "At least the deputy prime minister acknowledges the dangers of the 'scrap it all' line peddled by the Tory diehards.
"Regulation is there to protect us all from businesses that rip us off, trash our environment, and risk our health - or even our lives. However, it is only of use if it is enforced. Enforcement should not be seen as a burden on business, but instead a way of ensuring that good businesses are not undercut by cowboys who disregard the law and cut corners, whether it is on paying VAT or not polluting our rivers.
"Cuts in enforcement will put even more of us at risk of damaged health or injury or death in our workplaces."
Clegg said the Coalition was "on a mission to liberate small business".
"First, we're halting the tide of new regulation. To that end, Vince Cable has introduced a radical one-in-one-out policy. It is the first of its kind in the world, and the business secretary has made new regulation a last resort in Whitehall.
"On top of limiting new rules, we're also hacking away at the ones that already exist. Our Red Tape Challenge invites ordinary people to identify overlaps, complexity and to highlight where the benefits are out of synch with the costs. That project has already looked at 400 regulations just in retail and hospitality. Over half - 220 - will be simplified or scrapped.
"Where people have expressed support for regulation, we're keeping it. Like with the hallmarking system for gold and silver. But, if it's tedious and pointless, its going. So no more insisting that a shop selling kitchen descaler has a poisons licence. No more having to pay for a piece of paper just to put on a little live music in a pub. Where there were 12 pieces of legislation on consumer rights, we're collapsing them into one.
"The end result will be a system designed for busy, working people rather than a job creation scheme for accountants and lawyers. And a system that saves you money. The Coalition's attack on red tape has already saved British businesses £3 billion. A further £600 million worth of savings could come just from the decision to exempt more companies from being audited.
"So there will be a major shake up of business inspection - going through the regulators, asking 'are they still necessary?'; 'should they still exist?'; making sure that, yes, they intervene when necessary, they offer advice and support, but otherwise they let you get on with it. "They will need to respect the Regulators' Compliance Code, which says regulators must think about and encourage economic growth. And they will have to make sure they aren't breathing down your necks. Why, for example, should regulators be able to turn up at your door whenever they want and as often as they want? Why can't we limit the number of inspections to, say, two a year, ensuring these bodies coordinate amongst themselves to stick within that limit?
"We also know that which-body-does-what can be extremely unclear. So we're minimising the number of authorities you will have to deal with in the future, introducing sunset clauses for new regulators, placing them under rolling review; if they become irrelevant, or their functions are replicated elsewhere, they'll go."
