The dispute at Chippenham College in Wiltshire is being seen as a test of industry-wide moves to sweep away pre-incorporation Silver Book terms of employment in favour of "flexible" contracts.
Chippenham's principal, Graham Baskerville, chaired the contracts committee of the Colleges' Employers' Forum - now merged into the Association of Colleges - which drew up the contract setting out new working practices for academic staff.
The National Association of Teachers in Further and Higher Education has resisted the CEF proposals and supported the Chippenham lecturers' at the three-day hearing in Bristol. It said it was "disappointed" at the panel's decision. Its lawyers are studying the 17-page judgment.
The new contract requires staff to work a 37-hour week with no limit on class-contact time and allows 35 days' holiday, replacing the 63 days provided under the Silver Book.
Two lecturers at Chippenham who lost their jobs after refusing to switch to the new contracts claimed they were unfairly dismissed. Five others who said they signed only "under duress" because of the ultimatum claimed constructive dismissal.
Both arguments were unanimously rejected by the three-member tribunal. It ruled that in law, the five were not dismissed because no clear date was given for the termination of their contracts. Nor could they claim constructive dismissal since their contracts included a provision for giving notice.
In the case of the two who refused to sign, the panel felt "on balance" that the college had acted reasonably and for business reasons.
It accepted that the college needed to save money, was reorganising its services to meet the changing needs of students, and was - in common with other institutions - under pressure from central government to phase out Silver Book contracts.
While none of these arguments were by themselves sufficient, together they justified the college's actions. The economies gained by forcing staff to accept flexible working were "modest", but there was "nothing unreasonable in the idea of making small savings".
Furthermore, the college had tried to negotiate nationally and locally, until it was clear no compromise could be found.
The panel acknowledged that it felt "no little sympathy" for the two sacked lecturers since they had for some time freely agreed to work flexibly while remaining on Silver Book contracts; their refusal to sign new agreements was based on a point of principle.
But it concluded: "When we performed the balancing exercise between the interests of the applicants and the interests of the [college], we unanimously concluded that the balance lay with [the college].
"It did not seem to us unreasonable, in all the circumstances of this case, for the [college] to conclude that the existing situation could not continue and that dismissal was the only alternative."
Getting a grip: Jamie Rouse, aged three, does limb exercises on a special plinth at Sheffield's Peto Summer School, being held at the Collegiate Crescent campus of Sheffield Hallam University. Lessons for children with cerebral palsy and other disorders are led by "conductors" flown over from the Peto Institute in Budapest, Hungary, by Paces Sheffield, a charity set up by parents to bring conductive education to the south Yorkshire city. The charity is to establish a temporary school in Sheffield later this year, and hopes eventually to open a permanent centre there.