Former Ethel Austin and Woolworths staff have lost a claim for compensation after the European court of justice rejected a case brought by trade union Usdaw.
The case was brought after the two companies fell into administration, and means about 1,200 former Ethel Austin employees and 3,200 ex-Woolworths staff will receive no money after losing their jobs.
Administrators closed Ethel Austin’s head office and distribution centre in Knowsley and 186 stores around the UK in 2010. In 2011 trade union Usdaw won a claim for its members that the administrators failed in statutory duty to consult with Usdaw before making the redundancies.
In January 2012 Usdaw won compensation worth tens of millions of pounds for employees of the high street chain but the 1,200 employees were denied compensation because they worked in stores with fewer than 20 staff.
In May 2013 Usdaw won a major landmark case at the Employment Appeal Tribunal that should have seen those excluded staff readmitted into the compensation scheme but the government sought leave to appeal the decision, which was granted in September.
The Woolworths staff were pursuing the claim after the business collapsed into administration in 2008. Employees from bigger stores were awarded compensation in 2012.
The Court of Appeal decided to refer the matter straight to the European court of justice, where the claim has now been rejected.
Usdaw general secretary John Hannett said: “Our case is morally and logically robust, so today’s verdict is a kick in the teeth. It is unfair and makes no sense that workers in stores of less than 20 employees were denied compensation, whereas their colleagues in larger stores did qualify for the award.
“These were mass-redundancy situations where one central decision was made to close the whole company down, with no individual analysis of the viability of each store on a case-by-case basis.”
Usdaw said it will seek a change in the law to protect future redundant workers suffering the same injustice.