Employees reaching the legal retirement age are being forced to leave their jobs at Epsom and St Helier Hospital.
Letters sent to employees by the trust's human resources department include a pre-written resignation letter which the employee was asked to sign. If they did not want to resign they were invited to appeal the decision.
But the hospital's branch secretary of trade union Unison, Kevin O'Brien, said all the appeals had been rejected and people were having to leave their jobs before they wanted to.
"I have 10 cases going to tribunal and another 10 or 20 in the pipeline. Some of these people are totally demoralised. They feel like they're not wanted - that after 30 or 40 years of working for the NHS, they are being thrown out.
"They are told they can either retire or reapply for their job - in which case they are told thank you, but no thank you'. The whole thing is a farce. This law is not worth the paper it is written on."
One employee, who asked not to be named, said she resented having to leave before she was ready. "When you live alone you need the money. I don't get the full state pension and I love my job," she said.
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In some cases staff were offered casual work at the hospital - but this work is not paid as well and comes without staff benefits such as sickness pay.
"The whole thing is a farce. This law is not worth the paper it is written on.”
Unison's Kevin O’Brien
Mr O'Brien said he believed that the trust was not solely to blame and that the legislation needed to be challenged at a national level.
Heyday, a branch of Age Concern, has mounted a legal challenge against the law, meaning that all tribunals on the issue will be put on hold until the outcome. If Heyday is successful employers such as Epsom and St Helier could have to pay compensation to those whose appeals have been rejected.
A hospital spokesman could not comment on how many people were affected by the law.
He added: "Epsom and St Helier University Hospitals NHS Trust, along with every other organisation in the country, has to comply with the Employment (Equality) Age Regulations Act (2006) which states that there is a national default retirement age of 65.
"All employees of the trust who are approaching 65 are informed by letter of this legislation, and are given their statutory six months notice in advance of their retirement date. Those who wish to work past 65 are legally entitled to request to do so and the trust considers these requests on a case by case basis."
He said that 12 employees had appealed so far and all had been turned down.
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