They claim that the new rules make it significantly more costly and complex for companies to keep workers on over the age of 65 and many will choose to let them retire rather than risk legal wrangles.

Age discrimination becomes illegal from tomorrow under the most sweeping reforms to employment law for 30 years. Companies will no longer be able to use terms such as “young” or “experienced” in recruitment adverts and all staff will be entitled to equal access to training and promotion.

There will still be a retirement age of 65 when most staff leave work for good, and companies will still be able to extend employment of their workers beyond that age. However, from tomorrow all staff must be treated equally, regardless of age, and the over-65s will be entitled to the same benefits, such as health cover and life insurance, as other workers.

Employers are likely to face a legal minefield when they eventually want their over-65s to retire, a process that could take up to 12 months.

Under the old regulations, companies could agree special terms with staff aged over 65. That typically meant an end to health insurance and a three-month notice period when either side wanted the agreement to end.

Simon Malcolm, partner at the City law firm Lawrence Graham, said that he was advising companies to let all their staff retire at 65.

“Our advice is that it is almost certainly going to be easier to refuse requests from employees to work beyond 65 to avoid additional cost and complexity. Benefits such as health insurance are significantly more expensive for those over 65, but must be offered to everyone. And there is no simple way to get staff to retire once you have agreed to let them work beyond 65,” he said. More and more people want to carry on working beyond 65 and until now companies were often happy to oblige, he said.

“But I think many people approaching 65 who want to carry on working to build up their pension are going to be in for a nasty surprise when they realise that their employer will not want to take the risk of keeping them on.”

Saga, which provides services for the over-50s, agrees and claims that workers as young as 50 could also suffer. This year, it planned to introduce a recruitment service for older workers, who typically find it more difficult to get jobs.

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Employers said that they were so worried about being sued for discriminating against young workers that they would not use it, so the plans were abandoned.

“We are bringing these un- intended consequences to the attention of the Government because we believe its objective of getting one million more people over 50 back into work can only be achieved by having special programmes designed to help them,” Tim Bull, marketing director of Saga, said.

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