Government fail to overturn Poundland work scheme ruling
The government has lost a Supreme Court appeal over a ruling its flagship "back to work" schemes were legally flawed.
Ministers failed in a bid to overturn an earlier ruling that regulations underpinning the schemes were invalid.
The case was brought by graduate Cait Reilly. She also claimed that requiring her to work for nothing at a Poundland store breached her human rights.
But the judges rejected claims that the schemes were "exploitative" and amounted to "forced labour".
Critics have said the sector-based work academy scheme and the community action programme - introduced in 2011 - are unfair because they involve work without pay and cuts in jobseeker's allowance (JSA) for those who failed to comply with the rules.
Five Supreme Court justices upheld a Court of Appeal decision which went against the government in February, because of shortcomings in the way the schemes were explained to those taking part.
They ruled the government had not provided a "sufficient detailed prescribed description" of the schemes and what would happen if people refused to take part.
But the Supreme Court rejected a counter-appeal against the scheme and upheld the Court of Appeal's ruling in the government's favour that the regulations did not constitute forced or compulsory labour.
They said the schemes came "nowhere close to the type the exploitative conduct" prohibited under the European Convention of Human Rights since the conditions attached to payment of JSA were "directly linked to its purpose".
'Won the argument'
Ministers brought in new rules allowing the unpaid schemes to continue pending the outcome of the appeal.
BBC correspondent Andy Moore said Wednesday's ruling made clear that the government was entitled to ask people to take part in the schemes and it would not have to further amend existing legislation.
Ms McVey rejected suggestions that the ruling was in any way a blow for the government, describing it as a "victory for common sense".
She told the BBC that the government had listened to the concerns about the schemes and would introduce further safeguards to clarify what was expected of those taking part.
But she insisted that judges had backed the fundamental basis of the scheme - to give people experience of holding down a job - and the potential use of sanctions.
"First and foremost, it is about getting people into work and supporting them the best we can and we are doing a very good job of that," she said.
In a statement, the Department of Work and Pensions said the Supreme Court had "unanimously upheld our right to require those claiming jobseeker's allowance to take part in programmes which will help get them into work".
"We have always said that it was ridiculous to say that our schemes amounted to forced labour, and yet again we have won this argument," Work and Pensions Secretary Iain Duncan Smith said.
Ms Reilly - who now works part-time in a supermarket - said she hoped the judgement would "serve to improve the current system and assist jobseekers who have been unfairly stripped of their benefits".
"I brought these proceedings because I knew that there was something wrong when I was stopped from doing voluntary work in a local museum and instead forced to work for Poundland for free," she added.
"It must be time for the government to rethink its strategy and actually do something constructive to help lift people out of unemployment and poverty."
Following the row, Poundland said it would no longer participate in the government schemes and launched its own "completely voluntary" work experience programme.
One employment lawyer said firms offering unpaid work schemes of any kind faced potential damage to their reputation and should "tread carefully".
"When it is provided by a larger company, unpaid work of any nature has become a contentious area," said Vanessa Di Cuffa, an employment law partner at Shakespeares.
"Any employer offering it is risking a PR backlash if third parties consider that such schemes are unfair.
"To avoid this, it is best practice for employers to ensure that any such schemes and programmes are considered and consulted upon with the union or employee representatives before implementation."