The European Court of Justice (ECJ) has ruled that employers can prohibit workers from the "visible wearing of any political, philosophical or religious sign," including the Islamic head scarf.
The ruling is the first on the issue of women wearing head scarves at work in the European Union, where the topic has become a source of heated debate.
The ECJ, the EU's top court, said that any ban must be based on internal company rules requiring all employees to "dress neutrally" and cannot be based on the wishes of a customer.
The ruling was the result of two cases from France and Belgium. The first case was filed by a receptionist who was fired in 2006 for wearing a head scarf to work at G4S, a security firm in Belgium.
The ECJ said G4S's actions were based on treating all employees the same, meaning that no person was singled out by the ban.
The ECJ ruled that a French company that fired a software engineer for refusing to remove her head scarf could have broken EU laws if it did so because a particular client objected.