56 workers at Kostal UK were granted £420, 000 by a Sheffield employment tribunal in February after the firm was found to have made 'unlawful inducements' by urging them to sign a new contract behind the Unite union’s back.
The company, which is based in Goldthorpe, near Rotherham, appealed against the case and it is due to be heard at an employment appeal tribunal in London today and tomorrow.
Unite said the hearing will be the first time an appeal court has considered certain points of law relating to a case like this.
Howard Beckett, Unite's assistant general secretary for legal services, said: “This is the first time an appeal court has considered this vital point of law.
“The EAT’s decision will set a binding legal precedent which employment tribunals across the UK will be obliged to follow in the future. This is a key case that employers and trade unions will be watching very closely.
"The importance of today's hearing cannot be underestimated."
Unite said the initial claims arose after the company wrote to employees individually in December 2015 urging them to accept a pay offer and to change their terms of employment or risk losing a Christmas bonus if they did not.
Unite said the offer was then repeated to those that did not accept it in January 2016.
This came after union members had voted to reject the company's pay offer and proposed changes to terms and conditions.
The Sheffield ET ruled that the approaches by the company amounted to unlawful inducements, contrary to section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 and awarded Unite members over £420,000 in compensation.