The compulsory retirement age in the UK is set at 65.

Campaigners for age equality today lost a key stage in their legal battle to banish the compulsory retirement age in the UK.

Age Concern had gone to the European court of justice in Luxembourg to argue that compelling people to stop work at or after 65 without compensation breaches EU equality requirements.

However the charity's claim was rejected by the advocate-general.

Today's legal opinion is a blow to hundreds of people forced to retire against their wishes who are claiming compensation through UK employment tribunals.

The case, which was taken by Age Concern's membership arm Heyday, was referred to the European court two years ago.

If the campaigners had won, hundreds of workers who had been forced to retire at 65 would have been able to claim compensation from their former employers.

Around 260 cases are on hold in tribunals awaiting the outcome of the Age Concern test case, and thousands more claims could have followed from pensioners forced to retire against their will.

Lawyers for Age Concern told a hearing earlier this year that the UK Employment Equality (Age) Regulations breach the EU's Equal Treatment Directive, which bans employment discrimination on the grounds of, among other things, age.

Introduced in 2006, the UK Regulations do ban discrimination on the grounds of age. Older workers have the right to ask if they can stay on beyond 65, but employers are not obliged to agree. Pensioners can be dismissed at 65 without redundancy payments, or at the employer's mandatory retirement age if it is above 65.

But the advocate-general Jan Marzak has now argued that a fixed retirement age is not necessarily contrary to EU rules.

Government lawyers insisted the exception was a matter for national rules, and the situation of retirement-age workers should not be governed by the EU Directive.

In today's legal opinion, Marzak agreed with Age Concern that UK rules on mandatory retirement are covered by the EU Directive. But he made clear that discrimination on grounds of age could be justified in certain circumstances.

Allowing employers to force employees to retire aged 65 or over "can in principle be justified if that rule is objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market, and it is not apparent that the means put in place to achieve that aim of public interest are inappropriate and unnecessary for the purpose".

Today's opinion is not legally binding, but is followed by the EU judges in about 80% of cases. The final verdict is due in about six months.