A legal challenge over compensation for a group of Welsh bus drivers who were sacked after industrial action is to be considered by the House of Lords.

And it is an action seen as a test case in employment circles which could strengthen or diminish the compensation rights of all workers who have been sacked following involvement in industrial action.

The long-running legal battle centres on 119 drivers sacked by bus company Crosville Wales, in November 1990.

After the strike action around half the jobs were re-advertised and 22 drivers were taken back.

However, the rest took their former bosses to an industrial tribunal on 7 June 1993 and won a ruling of unfair dismissal.

And the tribunal decided that although the drivers had contributed to their own dismissal by taking part in the industrial action, that did not provide legal grounds for a reduction in their compensation.

But on 14 March 1994, while dismissing an appeal by the bus company against the unfair dismissal finding, Mr Justice Mummery at the Employment Appeal Tribunal held that the financial awards to the drivers could be reduced because of their involvement in the action.

That decision was overturned in the Court of Appeal last July when Lords Justices Beldam, Waite and Otton decided involvement in the strike action did not provide legal grounds for a compensation cut.

In reaching their decision the appeal judges questioned whether the drivers, apart from participation in the strike, had been responsible for any other conduct justifying a cut in their compensation. They decided there was no evidence of such conduct and in those circumstances their compensation should not be cut.

However, Crosville, which had been refused leave by the Court of Appeal to continue its case to the Law Lords, applied direct for leave to renew its challenge. The Lords have now given the green light for the appeal to go ahead.