Scrapping the default retirement age (DRA) could benefit the economy by retaining ‘talented and skilled’ older employees and creating more jobs for more people, the Law Society has said.

The government confirmed last week that from 1 October, employees who reach 65 years of age and are still capable of doing their job should be allowed to continue working. Nobody can be forced out of the workplace on the grounds of age alone, but must be dismissed for the same reasons, such as poor performance or dishonesty, as people under 65.

The government said employees will benefit from choosing when and why they retire, while also benefiting the economy by paying tax and national insurance for longer. Employers will be able to reduce expenditure by excluding staff aged 65 or over from company benefits, such as life and medical insurance, if the premiums become too expensive.

Law Society chief executive Desmond Hudson said that retaining ‘talented and skilled’ older employees was ‘desirable’, but solicitors should advise clients about their and their employees’ rights ahead of the changes.

Gordon Turner, principle at London firm Partners Employment Lawyers, said: ‘Employers who clearly explain the business case for retirement at 65 should not fear being taken to the employment tribunal by employees. This is really just good industrial relations – avoiding assumptions, looking for common interests and giving clear explanations. Younger staff will no doubt be watching how the older employees are treated, and employers who boot their loyal staff out on a whim will no doubt face other consequences.’

Denise Keating, chief executive of the Employers Forum on Age, said: ‘Scrapping the DRA will give employers access to wider recruitment pools and help them retain the corporate memory. Research has shown that mixed-age work teams bring increased customer satisfaction, creating more business and more jobs for more people.’

The decision to abolish the DRA, confirmed last week, follows a joint consultation by the Department for Business, Innovation and Skills and the Department for Work and Pensions.