The GMB Scotland union is fighting for redundancy pay for workers laid off when Mortons Rolls went under, after their claims were refused.
All 230 staff were told they were losing their jobs when the Glasgow company collapsed in March, but the Redundancy Payment Service has now ruled the firm was still solvent when taken over.
It stated that as the jobs were transferred to new owners Phoenix Volt before Mortons collapsed, under TUPE employment regulations, those staff retain the same terms, conditions and rights.
GMB Scotland is now taking legal advice and is writing to city politicians urging them to support the sacked workers.
Anyone who works for a company for more than two years is due redundancy pay depending on length of service and the government agency said Phoenix Volt should be making the payments. Around half of the workforce returned 15 days after Mortons went under, but on new terms and conditions.
In letters to laid off workers, the Redundancy Payment Service said their jobs were not made redundant, but previously transferred to Phoenix Volt when both firms were solvent, adding that the new owners were responsible for paying workers any money owed.
GMB Scotland organiser David Hume said: “When Mortons Rolls collapsed, the workforce was told they were being redundant, the firm was going under and their jobs were lost - there was no suggestion their roles had been transferred to new owners.
“More than 100 of those workers were not asked to return when the factory resumed production; but they were made redundant and deserve redundancy pay.
“We are now urgently seeking legal advice on what exactly happened at Mortons Rolls, including issues around TUPE, unfair dismissal and redundancy pay.
“This is not about if these workers are due payment, it is about who pays it; someone is liable and they will be held liable.“
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