The European Court of Justice (ECJ) has ruled that compulsory retirement at age 65 is permitted in Spain, in a decision that could have major consequences for the UK.

The Court said that while Spanish compulsory retirement laws were discriminatory on the grounds of age, the legislation was "justified" because it was part of collective agreements to promote employment.

This will not directly affect individuals in the UK. However, UK law also allows compulsory retirement and is being challenged separately at European level. The Spanish ruling could hold some clues as to how that case will fare.

Juliet Carp, a solicitor at City law firm Speechly Bircham, said: "It's a similar sort of challenge in that it's tackling the legality of compulsory retirement. The ECJ is likely to rule that regulations are discriminatory, and it will look at whether the justifications the UK government has given are good enough."

She says it's possible that the ECJ might not accept the British policy objectives as a legitimate excuse for age discrimination, but she said: "I suspect it will come to the same conclusion."

Catherine Barker, a solicitor at Pinsent Masons, said there are arguments on both sides. She said there were significant differences in the cases. The Spanish case was between an employee and their employer, while the UK case sees a pressure group face the government directly. In addition: "The Spanish case objectively justified discrimination on the grounds of social policy, whereas there is no social policy justification in the UK."

Jonathan Maude, a partner with Manches law firm, said: "It's not a complete torpedo for the UK case, but Lily Forman/Fotolia.comit does dent it."

The ruling follows a recent UK Employment Tribunal decision that law firm Freshfields could reorganise its pension to the detriment of some older partners.

Carp said these decisions shouldn't damage the legislation: "The scope for justification over age discrimination is likely to be broader than for sex or race discrimination, because there's an element of age discrimination people find acceptable. We wouldn't expect a 10-year-old to be working in a factory, for example."