Jess Varnish’s long-running dispute with British Cycling and UK Sport is to be heard before Manchester Employment Tribunal next week in a case which could have repercussions for hundreds of funded athletes.

Former track cyclist Varnish was seeking to compete at the 2016 Rio Olympics, but was dropped from the Great Britain team just a few months prior to the Games.

She alleges she was discriminated against and Manchester Employment Tribunal will sit next week at the start of a potential two-stage process.

The first stage, from December 10 to 17, is to determine if, as an athlete in receipt of UK Sport funding, Varnish was self-employed or an employee.

Should it be ruled that Varnish was an employee, the parties would reconvene for a tribunal in 2019 with the now 28-year-old claiming she was dismissed on the grounds of sexual discrimination.

The case could have implications for the hundreds of athletes, across Olympic and Paralympic disciplines, who are backed by UK Sport and their respective national governing bodies.

There have been comparisons drawn with football’s Bosman ruling, which in 1995 afforded more contractual freedom for players.

Simon Fenton, a partner at Constantine Law and representing Varnish, said in a statement: “It is Varnish’s case that she was an employee [or worker], with the right not to be discriminated against.

“This case comes in a line of decisions from the cases of Uber, Addison Lee and Pimlico Plumbers which show how tribunals are looking at what actually happened in practice rather than simply accepting what is said in the contractual documentation. And they are deciding that the individuals are workers.

“If it is decided that Varnish was either an employee or worker, she will have to come back to tribunal some time in 2019 for them to decide whether she suffered sex discrimination.”

Oral and written witness testimony will be heard.

Should Varnish earn employee status, UK Sport will likely have to overhaul its funding system. The tax implications will mean less money is available, so fewer athletes may be funded.

UK Sport declined to comment on the proceedings, as did British Cycling.

A UK Sport spokesperson said: “UK Sport has been advised that we are unable to comment while these legal proceedings are taking place.”

However, last month UK Sport chief executive Liz Nicholl argued in an interview with the BBC that the funding athletes receive from the Lottery, which is distributed by her agency, is “similar to a student grant.”

Varnish’s representatives are understood to take exception to that view, believing there to be a greater similarity to the central contracts issued by the Rugby Football Union and England and Wales Cricket Board for England international players.

It is expected to be argued that athletes funded by UK Sport are compelled to make appearances, cannot make sponsorship deals which clash with their sport’s or UK Sport’s own partners, and they can be means tested out of the funding pool if they receive significant extra income.

Fenton added: “The purpose of demonstrating that UK Sport funded athletes should be regarded as employees or workers is to ensure that all athletes in the future will have protection from bullying and discrimination, be subject to income tax and receive full state pension allowances.

“It will also ensure that UK Sport presides over a more positive and egalitarian environment for all athletes now and in the future.”

Varnish was dropped by British Cycling in April 2016 after the 2016 Track Cycling World Championships in London, after the two-woman, two-rider team sprint squad she was part of failed to qualify for the Rio Olympics and she criticised her coaches.

Varnish later alleged sex discrimination against Shane Sutton, then the technical director of British Cycling, saying she was told to “go and have a baby” and that he implied she was overweight.

Sutton later resigned and was subsequently found to have used sexist language towards Varnish.

An independent review, jointly commissioned by UK Sport and British Cycling, reported in June 2017.

Sutton, UK Sport and British Cycling were strongly criticised in the review.