Compulsory retirement at the age of 65 could still be overturned despite a European ruling, a Kent lawyer has said.

The European Court of Justice ruled that the UK Government was not in breach of European law by requiring workers to retire at 65.

About 25,000 UK workers are estimated to face "default retirement" at 65 when they would prefer to stay on.

But the court said it was a matter for national decision and referred the issue back to the High Court in London, where the Department for Business Enterprise and Regulastory Reform (BERR) will have to defend the policy.

Age Concern argued in what is known as the Heyday Challenge that the UK Government was wrong to impose the default retirement age, claiming it conflicted with age discrimination laws.

Campaigners claim that in the present recession, older workers are an easier target to lay off.

However, many are under financial pressure to stay on longer at work because of plummeting returns from savings, investments and private pension schemes.

Many also wish to work because they are fit enough to do so, unlike earlier generations who had shorter life expectancy.

James Willis, associate at Thomson Snell & Passmore, which has offices in Tunbridge Wells and Greenhithe, said the judgement was bad news for the Heyday challenge but not necessarily the final nail in the coffin of the campaigners’ argument.

The Department for Business Enterprise and Regulatory Reform would be required to prove in the High Court that the compulsory retirement of employees at the age of 65 was justifiable by reason of the need to achieve "legitimate social policy objectives".

Mr Willis said it was by no means a foregone conclusion that the court would be persuaded by ministerial arguments. "This dispute is far from over," he said.

As for employers, they were left with uncertainty. While retiring older workers in the current economic climate might be seen as a low cost alternative to redundancies, compulsory retirment might be ruled unlawful.

"As a result, employers may be best advised to proceed with a redundancy consultation process, ensuring that workers of all ages are treated equally. This is likely to mean avoiding potentially indirectly discriminatory selection criteria such as length of service, which can actually favour older workers."

Age Concern said that the result did not alter what it called the Government’s contradictory position: "On the one hand it wants people to work for longer, on the other, it’s happy to keep this legislation that reinforces a 'grey ceiling'."