Britain's compulsory retirement age of 65 will break European law if the Government cannot prove that there are social reasons for it, judges ruled today.

The European Court of Justice (ECJ) said that ministers would have to prove to the High Court in London that there was a "legitimate aim" behind the retirement age – rather than the regulations purely being a way of businesses making money.

The verdict was the latest stage of the legal battle by the charity Age Concern to banish the threshold, which it says is discriminatory.

Sitting in Luxembourg, the ECJ rejected the charity's claim that the Government's 2006 retirement-age regulations were discriminatory on their own, a move welcomed by ministers.

However, they added that the rules would apply to European law only if ministers could prove that they were "objectively and reasonably justified by legitimate aims, such as those related to employment policy, the labour market or vocational training".

The Government would have to prove to the High Court – which will make the final ruling on the case – that the laws were not merely in place to protect business, the judges said.

"By their public interest nature, those legitimate aims are distinguishable from purely individual reasons particular to the employer’s situation, such as cost reduction or improving competitiveness," the statement added.

"It is for the national court to ascertain, first, whether the United Kingdom legislation reflects such a legitimate aim and, second, whether the means chosen were appropriate and necessary to achieve it."

The UK’s Employment Equality (Age) Regulations ban age discrimination by employers when selecting candidates eligible for jobs.

However, under the rules, pensioners can still be dismissed at 65 without redundancy payments – or at the employer’s mandatory retirement age, if it is above 65.

Today’s verdict, in what was seen as a test case, leaves about 260 legal actions pending in tribunals, while thousands more pensioners who were forced to retire against their will have compensation claims waiting if the High Court’s final ruling decides that the compulsory retirement age is not justified.

About 25,000 workers are estimated to face "default retirement" at 65 in the UK every year, when they would be happy and able to carry on.