Small firms are in danger of receiving legal action due to unclear laws on ageism in the workplace, a leading employment law firm has warned.

At the present time, there is a code of conduct to influence employers' treatment of older workers but this code is a guide only and carries no weight in the courts.

European Union (EU) rules on dealing with older employees are set to hit the UK in 2006 but law firm Thomas Eggar has advised companies to start seeking legal advice now before firing workers heading towards retirement age.

This is because a loophole in the law has allowed older workers to bring legal cases against their employers on the basis of gender discrimination.

People have argued the law discriminates against men because they are more likely to work beyond the statutory retirement age of 65.

Ageism has been highlighted as a persistent problem in many small businesses.

A recent survey by pollsters Mori revealed ageism was the biggest form of discrimination by managers, making up 38 per cent of all complaints.