Following the announcement on Monday by Labour's deputy leader, Harriet Harman, of a "shake-up" that could see an end to the controversial mandatory retirement age for workers, the FSB is urging a provision in the law to protect employers that need to retire staff because of ill health that threatens their levels of performance.
According to FSB figures, nearly 80% of small firms do not use the default retirement age for their staff and 76% believe retirement should be based on a mutual decision between the employee and employer.
Two thirds said they did not think the Government should set a default retirement age and 90% of small businesses would consider an employee going into part-time or flexible working rather than retiring.
John Wright, National chairman at the Federation of Small Businesses, said: "Many small business owners have no intention of putting in place a blanket policy to retire their staff at 65 - they understand the valuable contribution and skills that older workers bring to the business. In a recent survey by the Federation of Small Businesses, 60% of respondents employ staff over 50 years old and a quarter employ staff that are over 65, showing that small firms are flexible employers.
"Businesses need to be able to make decisions about their workforce without the threat of expensive tribunals from employees who are unable to work because of age-related issues. The ability to let someone go because of ill-health should be made sacrosanct for those employers."