A claim that forcing employees out at age 65 is discriminatory has been thrown out by the European court.

In the case of Palacios vs Cortefiel Servicios, the European Court of Justice has said the Spanish firm is justified in forcing out an employee at 65, because it helped reduce unemployment and because it offered a full pension entitlement. 

Sacker & Partners LLP solicitor Robin Simmons said: "For UK pension schemes this gives a first glimpse at how the ECJ will test exemptions in member states' national legislation against the anti-discrimination principles laid down by the Directive.

"While recognising that exemptions in national legislation are permitted, it would seem that the ECJ has an appetite to test such exemptions on a case-by-case basis."

Lawyers have warned the ruling could damage a related claim against UK laws being brought by Heyday, an offshoot of the charity Age Concern.

It argues that Britain's retirement age is illegal under EU law. Simmons, however, believes the outcome remains uncertain.

He said: "In the Palacios case, the Spanish government was able to convince the ECJ on the facts that its national employment policy was a 'legitimate aim' and that the aim was 'appropriate and necessary' - satisfying the test in the Directive. Whether the UK government can do likewise by reference to our own national circumstances remains to be seen. The ECJ may yet rule out the UK's default retirement age of 65."

 The ECJ's reasoning is similar to that of the London Employment Tribunal which cleared law firm Freshfields Brickhaus Deringer of discriminating against a former partner on the grounds of age.

The Tribunal said that changes the to firm's pension scheme were discriminatory but justified because they solved a wider financial issue at the firm.