USDAW, the shopworkers union has called for a legal loophole to be closed after 1,200 former Ethel Austin employees were denied compensation.

Usdaw made a claim on behalf of its members after administrators MCR failed to consult with the union before making 1,700 staff redundant in 2010.

The employment tribunal in Liverpool found MCR had failed in their legal obligations to consult with Usdaw and awarded about 500 of its members compensation of eight weeks pay, capped at £380 a week - the maximum payable in these circumstances.

However, the pay-out has been limited to employees made redundant from the retailers former head office and distribution centre. In a judgement that the union may appeal, the tribunal decided that MCR was not obliged to consult about workplaces where less than 20 redundancies were being made, thus ruling out all but one of the 186 Ethel Austin stores that were closed - including those in Stockton and Peterlee.

John Gorle, Usdaw National Officer said: "While the award can never fully compensate for staff losing their jobs, Im sure our members will welcome the money and appreciate the effort Usdaw has made to secure this compensation for them. Cases like these really demonstrate the value of belonging to a trade union.

"However, I'm bitterly disappointed the tribunal limited the scope of the award. The fact that many of our members wont be compensated just because their store had less than 20 staff is plainly wrong and shows the gaping loophole and injustice of the current legislation.

Usdaw believes that the current interpretation of the law on collective redundancies was "both unfair and possibly a breach of the European Directive" which seeks to protect workers in large scale redundancy situations.