Companies face "huge uncertainty" and a greater risk of being taken to employment tribunals if the UK government does not delay planned changes to the retirement age, the CBI claimed today.
The business group said that scrapping the so-called Default Retirement Age (DRA) from April would create "unintended consequences", and pleaded for more "legal clarity" on the issue.
From next year employers will not be allowed to dismiss staff because they reach the age of 65, but the CBI said the rules around retirement would become less clear.
John Cridland, the CBI's director-general designate, said: "The ageing population and the shortfall in pension savings make it inevitable that people will want to continue working for longer. Employers understand this, and businesses value the skills, experience and loyalty that older workers bring.
"However, in certain jobs, especially physically-demanding ones, working beyond 65 is not going to be possible for everyone. The DRA has helped staff think about when it is right to retire, and has also enabled employers to plan more confidently for the future."
The CBI called for the planned change to be delayed for a year and for the law on unfair dismissal to be made simpler.
The business group added that the state pension age should be used as a "milestone" after which employers would no longer have to offer occupational benefits.
Cridland added: "The UK government needs to act fast, and there should be no changes to the retirement framework until these issues are resolved."
Eilidh Wiseman, head of employment at "big five" Scottish law firm Dundas & Wilson, said the present situation made it hard to give advice.
"I agree that there is a lack of clarity in the UK government's plans," she said. "The devil is in the detail, or perhaps the lack of it. A thorough analysis of the statutory changes foot-noted in the consultation paper doesn't give a clear enough position.
"At the moment it's very difficult to provide accurate advice about retirements taking place from October 2011.
The UK government must issue its draft legislation with all due haste."
The CBI's comments came as a report published today by the Chartered Institute of Personnel and Development (CIPD) warned that the number of middle-aged unemployed has increased.
The CIPD said two-thirds of the 350,000 additional jobs created this year have mainly gone to people under 35, with the remainder filled by people in their 50s or 60s, with middle-aged people missing out.
Dr John Philpott, the CIPD's chief economic adviser, said: "It is not clear why 35 to 49-year-olds have so far been by-passed by the jobs recovery.
"One possibility is that this group has received less help and support from policy makers than either younger or older people."