The 28-year-old had argued that she was in effect an employee of British Cycling and funding agency UK Sport, and she was therefore entitled to basic workers' rights.
The case had threatened to impact how UK Sport offers grants to British athletes in future, potentially forcing the body to introduce benefits and increased protection in the event of disputes or grievances.
UK Sport said the verdict provided reassurance "that the relationship between UK Sport, National Governing Bodies and athletes is as it has always intended to be."
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Despite the outcome, Varnish said the case had led to "significant change" taking place.
"I knew at the beginning of the trial, no matter the outcome, that I had already won," she said in a statement on Thursday.
"Since I first spoke out in April 2016 about my experience at British Cycling, significant change has taken place.
"I firmly believe this change happened, because athletes brought to light the culture of fear and lack of investment in athlete welfare that permeated through the British World Class Performance system.
"I'm happy I was the catalyst for other athletes to speak up and challenge their coaches and organisations, to push for a better and fairer environment in which to excel."
Varnish said she could hold her head high knowing that she "left no stone unturned and always told the truth."
"I will be meeting with my legal advisors in the coming weeks to consider grounds for an appeal," she added. "I take this process seriously and will not appeal for appeal’s sake."
(Reporting by Hardik Vyas in Bengaluru; Editing by Toby Davis)
