Three judges in London ruled that the regulations under which most of the Government’s back-to-work schemes were created are unlawful and quashed them.
Miss Reilly, 24, from Birmingham, and 40-year-old unemployed HGV driver Jamieson Wilson, from Nottingham, both succeeded in their claims that the unpaid schemes were legally flawed.
Their solicitors said later the ruling means “all those people who have been sanctioned by having their jobseekers’ allowance withdrawn for non-compliance with the back-to-work schemes affected will be entitled to reclaim their benefits”.
Today’s ruling was made by Lord Justice Pill, Lady Justice Black and Sir Stanley Burnton.
In November 2011, 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”.
She was told that if she did not carry out the work placement she would lose her jobseeker’s allowance.
For two weeks she stacked shelves and cleaned floors.
Mr Wilson, a qualified mechanic, was told that he had to work unpaid, cleaning furniture for 30 hours a week for six months, under a scheme known as the Community Action Programme.
He objected to doing unpaid work that was unrelated to his qualifications and would not help him re-enter the jobs market.
He refused to participate and as a result was stripped of his jobseeker’s allowance for six months.
After the ruling Public Interest Lawyers, who represent Ms Reilly and Mr Wilson, said the Court of Appeal’s unanimous decision was a “huge setback for the Department for Work and Pensions (DWP), whose flagship reforms have been beset with problems since their inception”.
They said that “until new regulations are enacted with proper parliamentary approval, nobody can be compelled to participate on the schemes”.
Solicitor Tessa Gregory, said: “Today’s judgment sends Iain Duncan Smith back to the drawing board to make fresh regulations which are fair and comply with the court’s ruling.
“Until that time nobody can be lawfully forced to participate in schemes affected such as the Work Programme and the Community Action Programme.
“All of those who have been stripped of their benefits have a right to claim the money back that has been unlawfully taken away from them.”
Ms Gregory said: “The case has revealed that the Department for Work and Pensions was going behind Parliament’s back and failing to obtain Parliamentary approval for the various mandatory work schemes that it was introducing.
“It also reveals a lack of transparency and fairness in the implementation of these schemes.
“The claimants had no information about what could be required of them under the back-to-work schemes.
“The Court of Appeal has affirmed the basic constitutional principle that everyone has a right to know and understand why sanctions are being threatened and imposed against them.”