A controversial clause in UK age-discrimination laws that effectively allows employers to force staff to retire at 65 is compatible with European law, an adviser to Europe’s highest court suggested today.

Jan Mazak, an Advocate-General of the European Court of Justice, giving a legal opinion on the case of a Spanish worker challenging compulsory retirement, said that European law allows individual countries to pass legislation permitting mandatory retirement ages.

The case, brought by Feliz Palacios de la Villa, a 65 year-old Spanish man forced to retire from retailer Cortefiel, concerned collective employment agreements, in which groups of workers sign identical contracts.

In accordance with Spanish legislation allowing mandatory retirement clauses in such agreements, Cortefiel insisted that Mr Palacios de la Villa sign a contract saying he would retire at 65.

Once he reached 65 and was forced to retire he challenged the contract, claiming that Spain was breaching European age discrimination laws by allowing Cortefiel to use mandatory retirement ages.

But suggesting that the ECJ rule against Mr Palacios de la Villa when it considers his case later this year, Mr Mazak said European age-discrimination law specifically excludes national provisions that set retirement ages. The ECJ usually follows legal opinions of its advisers.

Although today’s case concerns collective employment agreements, which are much less common in the UK than elsewhere in Europe, lawyers said that the legal opinion also applies to individual contracts and so the case is directly relevant to British workers.

James Baker, an employment lawyer at Macfarlanes, said: “This opinion will disappoint thousands of workers in the UK who are pinning their hopes on a legal challenge to the mandatory retirement age.

“It’s a very significant decision and may prove fatal to ongoing challenges to national retirement ages.”

Lawyers said the decision will come as a blow to British workers anticipating a separate European court challenge brought by Heyday, an offshoot of the charity Age Concern.

Heyday claims that the UK’s age-discrimination legislation is in breach of European law by giving British employers a get-out that allows them to force workers to retire at 65 as long as they follow certain procedures.

Daniel Barnett, an employment barrister at 1 Temple Gardens, said that today’s decision ”does not bode well for Heyday's challenge.”

Gordon Lishman, Director General of Age Concern, said: “This case clearly has some relevance to our Mandatory Retirement Ages case but it is not directly comparable in all senses. This opinion is of course not binding on the European Court of Justice."

“Mandatory retirement ages hit those who need or want to work: the economic, social and moral arguments for removing the retirement ages are overwhelming. We hope legislators in the UK and across Europe will act quickly to remove all unfair and discriminatory rules relating to retirement," he added.

Although it presents a blow to workers, Mr Baker said the decision would be welcomed by business that argues it needs to be allowed to manage workplace succession by planning for retirement and replacement of staff.

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