The decision paves the way for women to seek compensation above the pounds 11,000 limit set by the Government. Lawyers said thousands of applicants could benefit, including more than 2,000 servicewomen claiming unlawful dismissal after they were sacked for becoming pregnant.
The ruling came in a case brought by Helen Marshall, a former health service employee forced to retire at the age of 62. In 1986, the European Court found that the Southampton and South West Area Health Authority had been wrong to sack Miss Marshall since men were allowed to continue working until the age of 65. Under EC law, men and women must receive equal treatment.
An industrial tribunal said Miss Marshall was entitled to compensation of pounds 19,405, including pounds 7,710 interest, but an appeal tribunal cut the award to pounds 6,250, which was the statutory ceiling at the time. Yesterday, the Luxembourg-based court said victims of sexual discrimination should receive full compensation for loss of earnings, as well as interest and damages for injury to their feelings.
Compensation 'must be adequate, in that it must enable the loss and damage actually sustained as a result of the discriminatory dismissal to be made good', the court said.
Although the judgment applies to state employees, solicitors said the Government would have to change the law so that the private sector was brought into line as well.
Last night Stephen Grosz, Miss Marshall's solicitor, said some women who had been awarded the pounds 11,000 statutory ceiling in past sex discrimination cases might be able to sue the Government. To do so, the claimants would have to show that the tribunal had wanted to give them more money but was hampered by the legislation.
The ruling applied only to sex discrimination cases, but would put pressure on ministers to remove the ceiling on race cases as well, he added. Kamlesh Bahl, chairwoman of the Equal Opportunities Commission, said: 'The EOC has for many years felt the statutory maximum for compensation is too low and has recommended that it be removed.'