Iain Duncan Smith condemns Poundland benefits ruling that opens a £40m floodgate Cait Reilly has won her Court of Appeal claim that requiring her to work for free at a Poundland discount store was unlawful She and unemployed HGV driver Jamieson Wilson, from Nottingham, both succeeded in their claims, in the legal aid-funded case The move could lead to compensation claims of up to £40million The ruling will not affect the schemes" existence but will mean the way in which they are written and enforced will need to change Lawyers say today's ruling could mean those whose benefits were stripped for refusing part in back-to-work schemes could now reclaim them But DWP say it is 'adamant there are no grounds for repayment' By Jason Groves A court ruling that a jobless graduate was unlawfully forced to do work experience at Poundland could lead to benefit claimants demanding compensation totalling more than £40million, it emerged today. Cait Reilly complained she was subjected to "forced labour" which breached her human rights after being told she risked losing her Jobseeker's Allowance if she refused to work for nothing at the discount store. The Appeal Court yesterday backed key parts of the geology graduate's claim and quashed the regulations that underpin the Government's back-to-work schemes which have helped thousands of unemployed benefit claimants find jobs. University graduate Cait Reilly has today won her Court of Appeal claim that requiring her to work for free at a Poundland discount store was unlawful Cait Reilly was backed by three judges in London who ruled that the regulations under which most of the Government's back-to-work schemes were created are unlawful and quashed them Work and Pensions Secretary Iain Duncan Smith called the ruling "utter madness" and said he had "no intention" of paying compensation to any claimant who declined to join a scheme and had their benefits docked as a result. Ministers also announced an immediate legal appeal and pushed emergency regulations through Parliament to prevent the schemes collapsing. Letters were being sent to one million benefit claimants last night warning them that the ruling did not mean they could pull out of work placements. Miss Reilly, 24, has landed a part-time job at Morrisons following her two-week stint in November 2011 stacking shelves and sweeping floors at Poundland, which she branded "a complete waste of my time." She was hailed a hero by Len McCluskey, general secretary of the giant Unite union. And TUC chief Frances O'Grady said the court judgment "blows a big hole through the Government's workfare policies." Work experience scheme - For 16 to 24-year-olds. Scheme offers a work experience placement with a business for two to eight weeks. Job seekers volunteer for the course but they must continue to look for permanent jobs. These placements can become apprenticeships and lead to potential employment later. Sector based work academy places - Open to people of all ages. They are voluntary to join and can last for six weeks, including training and then four weeks' work experience, tailored to local job vacancies. They end in a guaranteed job interview. Jobseekers can still claim benefits but once they get a place attendance becomes mandatory and face losing benefits if they don't attend. Mandatory work activity - Placements are usually for people who have been unemployed for more than 13 weeks. Each placement can last up to four weeks. People can still receive benefits but can face losing them for 13 weeks if they fail to attend. Work programme - is open to anyone and is the backbone of the government's back-to-work policy. If you are 18-24, nine months after you start to claim jobless benefits you are required to attend the Work Programme. If you are above 25 years old, 12 months after you start to claim jobseekers' allowance you are required to attend. It is delivered by companies and charities appointed as service providers by the DWP. Post work programme - expected to start this year, it will be for those who have been through the Work Programme and have still not found a job. Participants will be expected to accept ongoing case management or a community action placement - a mandatory six-month work experience placement tailored to your local communities needs. Anyone who fails to attend without a good reason faces losing their benefits. But Mr Duncan Smith said he was determined to press ahead with schemes designed to get people back to work - and would continue to strip benefits from those who refused to take part. The Work and Pensions Secretary said: "I fundamentally disagree with the ruling in this case and will fight it all the way. Our work experience scheme is a huge success and the young people I speak to who have volunteered to take part find it hugely rewarding and helpful. People who are fit for work should no longer expect to receive benefits in return for doing nothing. We want people to be ready for work and we are trying to help them. "To try and liken this to "slave labour" is frankly insulting to anyone living in oppression around the world and to the hard-working taxpayer here who pays for benefits. Miss Reilly had to leave her voluntary work at a local museum and work unpaid at the Poundland store in Kings Heath, Birmingham, under a scheme known as the 'sector-based work academy' Yet when the Government recommends that someone who is out of work and capable of working should undertake a work placement, we are taken to court for breaching human rights? This strikes me as utter madness. Miss Reilly, from Birmingham, and 40-year-old unemployed HGV driver Jamie Wilson, from Nottingham, succeeded in their claims that the Government's unpaid work schemes were legally flawed. Their solicitors said the ruling meant that "all those people who have been sanctioned by having their Jobseeker's Allowance (JSA) withdrawn for non-compliance with the back-to-work schemes affected will be entitled to reclaim their benefits." The DWP last night said up to 150,000 people had had their benefits stopped for failing to take part in schemes. In his ruling, Lord Justice Pill said he agreed there was an 'important public interest in getting people back to work' as well as a 'major saving in not having to pay Jobseeker's Allowance, and possibly other benefits.' The judge also said he appreciated there could be a substantial saving of public money if effective sanctions are available when jobseekers are not cooperating with proposals. He added: 'The Secretary of State's object in these proceedings is not to end jobseeker's allowance but to ensure that it is only paid to those actively seeking employment and prepared to cooperate with attempts made by the state to achieve that end. The entitlement to receive the weekly sum should depend on such cooperation. But the judge said it was a matter of 'statutory construction'. Declaring the regulations unlawful, he said they must be quashed since their central purpose was to impose 'requirements' on claimants of jobseeker allowance and impose sanctions for failing to comply. He said: 'Claimants must be made aware of their obligations and of the circumstances in which, and the manner in which, sanctions will be applied.' Payments can be stopped for anything from two weeks to three years, although the typical sanction for a first offence is four weeks. Officials refused to say how much compensation might potentially be involved as ministers were determined not to pay a penny. But if those involved had their £71-a-week JSA payments stopped for an average of four weeks the bill would top £40million. Miss Reilly said she was "delighted" by the judgment, adding that it was unfair for benefit claimants to be expected to work without additional pay. She said she had been forced to give up voluntary work at a museum to attend the work experience at Poundland, which she said had not provided her with any training. "I don't think I am above working in shops like Poundland," she said. I now work part time in a supermarket. It is just that I expect to get paid for working. Her claim that compulsory work experience breached her human rights was thrown out by the court. Lord Justice Pill said he accepted there was an "important public interest in getting people back to work." But judges accepted her case that the DWP regulations underpinning seven back-to-work schemes were unlawful. They ruled that the regulations, introduced in 2011, did not comply with separate laws setting out the power of the DWP to stop people's benefits. Claimants were also not given enough detail about what sanctions they would face if they refused to take part. The DWP said precise figures on the number of people helped back to work by its schemes were not yet available. But of almost 65,000 people placed on work experience between January 2011 and May 2012, about half were no longer on benefits 13 weeks later. The DWP said studies had found that, after 21 weeks, work experience participants were 28 per cent more likely to get a job than those who chose to languish on benefits.