The government has lost the latest round of its legal battle to prevent thousands of jobseekers potentially clawing back millions in benefit payments that were stopped after they refused work placements under a “flawed” employment scheme.



Three court of appeal judges in London dismissed the challenge against an earlier high court ruling, which found that emergency laws pushed through by the government in 2013 were incompatible with human rights law.

Ministers are considering whether to appeal against the ruling, which the government’s lawyers argued in court would leave it at risk of having to repay up to £130m in benefit payments taken from claimants who were sanctioned under the scheme.

The ruling was the latest in a series of judgments dating back to February 2013 in what has become known as the Poundland case.



The saga began when Cait Reilly, a geology graduate, won her claim that it was unlawful to force her to work for free at the discount chain Poundland as a condition of her claiming jobseeker’s allowance.

The high court ruled that the government had acted unlawfully by not giving unemployed people enough information about the penalties they faced if they refused to work unpaid, in some cases for hundreds of hours.

The coalition government, with the support of the Labour party, subsequently rushed emergency legislation through parliament in three days to retrospectively correct the flaws in the original employment scheme.

It claimed the Jobseekers (Back to Work Schemes) Act was necessary to “protect the public purse” because the benefit sanctions it had imposed were justified on the grounds that the claimants had breached rules.

However, the law was challenged by campaigners in the high court on the basis that it retrospectively made lawful what senior judges had declared unlawful.



Campaigners argued successfully that, by introducing the law, the government had in effect determined the outcome of sanction appeals lodged by thousands of claimants in favour of the Department for Work and Pensions (DWP).

Friday’s ruling rejected the government’s argument, made in its appeal, that the act was justified on the grounds that sanctioned claimants did not deserve a benefit repayments “windfall”, which would be costly to the taxpayer.

It said: “The rule of law endures for the benefit of the undeserving as well as the deserving.”

Lord Justice Underhill, announcing that the decision of the high court had been upheld, said that in the cases of those claimants who had already appealed against their sanctions, the act was incompatible with their rights under the European convention on human rights.

Although government lawyers estimated that 250,000 claimants may be eligible for repayment at a cost of £130m, the appeal judges – noting that only those claimants who had lodged appeals before the act was passed would be eligible – said the real cost could be as little as £1.3m.

Padraig Hughes, of Public Interest Lawyers, said: “The court of appeal has now confirmed what the high court made clear in 2014 – that the government’s cynical attempt to introduce retrospective legislation, after it had lost its previous case in the court of appeal, is unlawful and a breach of the Human Rights Act.



“It is yet a further example of the reckless approach this government continues to take towards the constitution and the rule of law.”

A spokesman for the DWP said: “It’s only right that jobseekers do all they can to find work while claiming benefits. We are considering the judgment.”

A spokesman for the campaign group Boycott Workfare said: “We’re glad the court of appeal, like the high court, recognises this for the appalling, grasping injustice it was and is, but we’re disappointed they haven’t gone further and told the government to repay all the money they owe to claimants.”