Mr Eustace, 63, a midfielder for the Owls in the 1960s, claimed he was sacked from his 20,000-a-year job as the club's chief scout in November 2006 due to a "grudge" held by chief executive Kaven Walker.

An employment tribunal in Sheffield last month heard that he faced redundancy proceedings after former manager Paul Sturrock left but he claimed that Mr Walker had decided he wanted to get rid of him months earlier.

Mr Walker told the tribunal his position had been reviewed as part of on ongoing cost-cutting process following the arrival of new manager Brian Laws who wanted to take over scouting duties.

Last night, Sheffield Wednesday said in a statement it was pleased the tribunal had "concluded in the club's favour".

"The outcome vindicates the club in the decision that it made regarding this matter and confirms that this action was taken in the best interests of Sheffield Wednesday," it said.

"The judgment proves that the club did nothing wrong with regard to the termination of Mr Eustace's employment and acted in a lawful manner throughout this process."