The shopworkers' union Usdaw said about 4,400 people denied a payout because they worked in stores with fewer than 20 staff will benefit from an Employment Appeal Tribunal ruling.
Around 3,200 former Woolworths' employees will now be entitled to up to eight weeks' pay and 1,200 previously working at Ethel Austin will receive up to 12 weeks' wages, said the union.
General secretary John Hannett said: "I am absolutely delighted with this decision. It has corrected the clear injustice of denying compensation to staff purely on the basis of the number of employees at each individual store.
"It did not make sense that staff in Woolworths and Ethel Austin's smaller shops were not part of the same collective redundancy situation as their colleagues in larger stores. So, you could have the ridiculous situation where 21 employees in one store were compensated for the lack of consultation whereas 19 staff in a store nearby received nothing.
"Tens of thousands of retail workers have been made redundant in the last four to five years and, while the administrators have taken their large fees, many workers were not only treated shabbily but denied the additional payment based on the 'failure to consult'.