EU court adviser backs UK in retirement challenge

Workers in London's financial district are silhouetted against a wall during a heat wave, August 4, 2003.

LUXEMBOURG (Reuters) - An EU court adviser backed British rules allowing employers to dismiss workers once they reach retirement age in what campaigners called a setback for equality efforts.

The case is being closely watched for its implications for the labour market in Britain, where lawyers estimate some 25,000 people are forced to retire against their will each year.

"In line with previous case law, rules such as the UK rules on mandatory retirement at issue do fall within the scope of the directive," the Luxembourg-based European Court of Justice said in a statement on Tuesday setting out the opinion of its advocate general.

The opinion is not binding on the court, which is expected to rule late this year or early next. In Britain, the government and a leading industry body welcomed the opinion but one equality campaigner appealed to the court to rule otherwise.

"This decision is certainly a setback on the road to ending age discrimination," Liz Lynne, a British Liberal deputy in the European Parliament, said, calling on the court to end what she called the "sudden cliff edge" of mandatory retirement.

The case was referred to the European court in 2006 by the British High Court after the National Council on Ageing argued the regulation contravened a European directive outlawing age discrimination.

Under legislation that came into force earlier that year, British workers have the right to work until age 65 and cannot be made to retire before then. However, employers can force workers over 65 to retire.

The advocate general advised that such discrimination can be justified "in the context of national law by a legitimate aim relating to employment policy and the labour market."

The British Department for Business welcomed the opinion.

"Our long-term aim is to move away from compulsory retirement but a culture change is not possible overnight," a spokesperson said.

The Confederation of British Industry noted that employees already had the right to request postponement of retirement and that the vast majority of such requests were granted.

"Losing the ability to retire people at 65 could lead to unintended consequences, with employers less inclined to take on older workers," said Katja Hall, CBI director of employment.

Under British pension reforms, the state pension age for both men and women is to increase from 65 to 68, phased in gradually between 2024 and 2046.

(Writing by Mark John; Additional reporting by Adrian Croft;

Editing by Dale Hudson)