The European Court of Justice has backed government calls to exclude workers at stores with fewer than 20 employees from the right to redundancy consultation.
Employees who lost their jobs in the Woolworths collapse of 2008 have been arguing through the courts that they are due a payout thanks to the company's failure to consult them prior to their redundancy.
Sky News reports that the USDAW shopworkers union, which had been leading the battle, is now hoping for a change in the law should Labour win next week's UK election.
"Our case is morally and logically robust, so today's verdict is a kick in the teeth,” general secretary John Hannett said. "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."
However, legal bodies had warned that a ruling in the workers' favour could have resulted in many big businesses facing costs rising to millions of pounds if they ever wished to restructure their workforce.
One added that the ruling "was a victory for common sense" and that "the business world can now breathe a collective sigh of relief”.