The forklift driver had taken time off work with a shoulder injury but his doctor had cleared him as fit to return. He assumed his job of 37 years would be safe. He was wrong.

The letter from transport giant Linfox said the 65-year-old was now stood down without pay after an assessment by company doctors. It said he was deemed unable to perform "inherent requirements" of the job, specifically, using a hand-held scanning device.

Older workers like Mr Russell are being stood down from Linfox warehouses across Melbourne, according to their union, which has accused the company of phasing out permanent staff in favour of "churn-and-burn" casuals from labour-hire companies.

Organisers say up to 100 older or unfit workers have been targeted at a single distribution centre in Truganina over the past 12 months, under a "blanket policy" to wipe out those unable perform every aspect of warehouse work.

The figure is not disputed by Linfox, which said the stand-downs were the result of productivity-boosting initiatives introduced last July at the distribution centre that Linfox operates for Coles.

Mr Russell spent most of his working life employed by Linfox, Australia's largest private logistics company. But he is now in limbo - jobless without being officially terminated, and unable to claim the pension.

"I felt terrible, actually," he said.

"Linfox has hundreds of sites around Melbourne and there must be jobs out there with lighter duties if that's what they want ... but they are replacing the older people with younger casuals [who] they can work as hard as possible. It shows a lack of loyalty and disrespect."

National Union of Workers organiser Matt Toner said the company had instituted a blanket policy of targeting workers it considered "liabilities".

"Within a warehouse there are different jobs done by people who are a bit older and have been with the company a long time, like fork-work, lane-marshalling and clerical," he said.

"But new management now says that unless you are doing everything here, we don't want you here."

Mr Toner said workers planned to step up industrial pressure on Linfox management to stop older staff being "thrown on the scrap heap".

A Linfox spokeswoman said the new processes at Truganina were communicated to company employees and were not in violation of workplace law.

"To date, the Fair Work Commission has not indicated that Linfox is in breach of the relevant provisions arising from the national enterprise agreement or with respect to specific general protections arising from the Fair Work Act," she said.

The company had also engaged an workplace expert to draw up "reasonable expectancies" for orders to be completed and ready for distribution, she said.

Industrial tension between the union and Linfox appear to escalating after the company recently filed a submission to a sweeping review of the Australian industrial relations system. Linfox alleges shift workers were harassed by union recruiters at the site in 2013 and has made fresh calls for restrictions on organisers entering workplaces.

The union strongly denies the claims, and said it was disappointed by the company's decision to air allegations dating back two years. Linfox's submission includes extracts of 10 written complaints by workers employed that year and said existing right-of-entry laws lacked balance.