As the Government announces more than 20,000 further defence job losses to save pounds 750m a year from the defence budget, the spectacle of huge awards to servicewomen dismissed illegally after becoming pregnant between 1978 and 1990 continues to induce outrage. But outrage is changing to incredulity that the whole sorry, convoluted and expensive comedy of errors could ever have happened.

This week, the first appeal by the Ministry of Defence against seven awards was completed. Forecasts of pounds 100m worth of claims still to be paid may be exaggerated. The very highest estimate is pounds 200m. By the end of last month 4,000 claims had been received, and 3,918 offers made by tribunals. Some 2,259 cases had been settled - under half the total, and the MoD had paid pounds 18m. The highest award so far has been made to Helen Homewood, a former Army major who received pounds 300,000 in April. But Josephine Green, a former naval nursing officer, is reported to be likely to receive pounds 400,000.

It is an astonishing story of incompetence and shortsightedness by the MoD, and of a culture out of step with an increasingly litigious society. Until August 1990 women in the British armed forces who became pregnant were always discharged. Before 1975, any employer could do the same. When the Sex Discrimination Act was introduced, the forces were excluded, because of the uncertain and demanding nature of military service. But in 1978 a European Community Directive was introduced without that exemption. The MoD, however, continued to dismiss servicewomen as soon as they found out they were pregnant.

'The MoD thought it was exempt under UK law,' said a spokeswoman. 'It was only when it was challenged that we realised we were wrong.'

First to enter the fray, in 1990, were two service nurses, Julie Lane and Leslie Leale, who had been dismissed when pregnant. Supported by the Equal Opportunities Commission, they began legal proceedings. This alerted the MoD, which came into line with civil law on maternity leave in August that year. On the day the women's case was due to start in the High Court, the MoD conceded, paying them pounds 15,000 and pounds 10,000 in compensation. Awards from industrial tribunals were then limited to pounds 11,000, so the Ministry, somewhat generously, paid more than it had to. Then, in a further move, the European Court of Justice set aside the pounds 11,000 limit. The floodgates were open for all 5,700 women dismissed on pregnancy grounds between 1978 and August 1990 to claim unlimited compensation for the careers they might have had.

The charged emotional atmosphere in which the claims have taken place have added to the drama. The cases of women who decided to have children knowing it would mean dismissal, compared - inappropriately, some would argue - with soldiers shot or blown up in training or on active service, provoke very strong reactions. When service personnel are mutilated or killed, the awards that they, or their next-of-kin receive, are usually derisory by comparison with the pregnancy payouts.

One soldier, who had lost both legs in an accident, received an award smaller than some of those to pregnant ex-servicewomen. But he was philosophical: 'If they can get the money, good luck to them.' The attitude is less jealousy than acceptance that people are entitled to exploit such a ludicrous loophole.

But emotions associated with childbirth and pregnancy also run deep. And once one woman received a big award, there was pressure on others. Some of those dismissed have not claimed compensation, feeling that their treatment was fair at the time - they knew the rules when they signed up, so how could they justify a claim? But there are other, all too human voices, whispering: 'If it's there, go for it.'

What happened in 1978 when the rules changed is unclear. If the MoD did try to obtain exemption from the European Directive, but was unsuccessful, that should have alerted it to the fact that it needed to obey it. The official line is that Whitehall was blissfully ignorant. Only Germany, whose military and civil laws are separate, was able to obtain exemption. Although Britain has 'Military Law', employment is governed by civil law.

Since 1978, Spain, which also has a separate law, has joined the EU, so Spain and Germany are the only two EU countries to which the Equal Opportunities Directive does not apply.

At the root of the incredible series of blunders lie uncertainties about the role of women in the forces, and the way changes have been implemented erratically. Lawyers acting for the women dismissed between 1978 and 1990 argue that the MoD deliberately framed the policy to avoid the inconvenience of employing mothers and providing maternity leave. But the approach was probably rooted in deep-seated cultural attitudes.

Women have always formed part of armies, but ever since regular women's services were formed in the First World War the possibility of death or injury to someone who was pregnant - or that a child's mother, rather than its father, might be killed in action, led to an understandable protectiveness. It is the same as the services' attitude to people with medical conditions, even those that would be of no consequence for civilian employment. 'It's just too complicated. They'll have to leave.'

Most of the women dismissed between 1978 and 1990 were not in front-line jobs. Since 1990, the distinctive women's services - Wrens, the Wracs and the Wraf - have all been subsumed into their parent services, and women have gone to sea and started flying fast jets. Ironically, perhaps, if there was ever a case for dismissing pregnant women, it applies more now than before 1990.

But while a remarkable change in attitudes to working mothers was taking place in the rest of society the process was slower in the armed forces. In 1978 the stark formulation that 'if you get pregnant you will be dismissed' would not have struck people in the forces as strange. An abortion or a divorce could terminate a promising military career - come to that, so would bouncing a cheque - a dreadful prospect for a young officer like me.

By 1990, all that had changed. And dismissal at 16 weeks' pregnancy seemed utterly archaic. That was compounded by the rigidity of rules which meant that those dismissed might apply to re-enlist after giving birth, but had no right to re-employment, or to their former rank.

The shortsightedness of the bureaucrats seems incredible. First, they assumed, apparently, that the provisions of the 1975 Sex Discrimination Act, from which the armed forces were exempt, remained in force, in spite of the 1978 European Directive. Possibly the MoD reckoned that it could cope with retrospective awards below the pounds 11,000 limit.

In the MoD's favour, however, it might be argued that industrial tribunals have too wide a discretion over the awards and did not apply common criteria. Surely, an issue potentially affecting 5,700 cases, which arose because of a fundamental conflict between British and European legislation, and could cost pounds 100m (though it probably will not) should be dealt with centrally.

The MoD is challenging the tribunals' awards for the first time, albeit only the amounts, not the principle. Of the seven contested this week no figure had been awarded in three cases. The other four had received between pounds 24,000 to pounds 172,000 from tribunals around the country - the highest to Nichola Cannock, 38, a former flight lieutenant in the RAF. The hearings are a vital test case - at least they should establish common criteria and calculations by tribunals.

Norman Lamb, a solicitor who has represented a number of women dismissed for pregnancy, said: 'The whole thing smacks of incompetence on the part of the MoD. Not only is it incredible that for 12 years they carried on in defiance of the Directive - we know of many women who raised the issue with their MPs. Knowing that the European Court decision of August 1993 lifting the upper limit on tribunal awards from pounds 11,000 was in the offing - if they'd made sensible offers prior to that they'd have got shot of many of these claims. On top of that, they still failed to impose a time limit. They could have imposed a time limit for claims - say three months - that would have been perfectly fair. They not only failed to implement individuals' rights, they also laid the public purse wide open.'

The appeals verdict is expected in a week or so. Then and only then, is the MoD likely to know the further cost of ignoring European law for 12 years.

(Photograph omitted)