Workers short-changed by collapsed pension schemes have suffered a major setback in their campaign for compensation.
The UK is not breaking European Union law even though there are flaws in the scheme that protects workers who lose their pensions when companies go bust, it was said yesterday.
The advocate general, an adviser to the EU's highest court, said the shortcomings were not serious enough to trigger action against the Government.
The opinions of advocates general are not binding but are followed by the full court in most of its rulings.
Britain's biggest private sector trade union Amicus brought the case before the European Court of Justice last year.
The union has championed the cause of former employees of Allied Steel and Wire who lost their jobs and pensions when the company went into receivership in 2002.
Unions are fighting for an estimated 60,000 former employees of AS&W and other companies such as United Engineering Forgings, which had a factory at Bromsgrove.
A further 1,200 employees of the Birmingham-based Kalamazoo group also face big pension shortfalls after the company went under two years ago.
An EU insolvency directive from the 1980s requires member states to take measures to protect employees' pensions.
Unions say Margaret Thatcher's government was the only one that failed to meet the obligation.
They also say that British reforms, such as the creation of the Pension Protection Fund in 2005 to help workers whose companies go bust, are inadequate.
But the Government says it has done all it is required to under EU law.