The men were enjoying a drink after work when the pub DJ persuaded them to do the dance routine on stage.
But another member of staff from the SouthCoast World holiday centre in Bognor was watching and reported the incident. Butlins bosses hauled them in the following day and told them they were sacked for bringing the company into disrepute.
Craig Horsfield, 24, Sean Brookes, 30, Sean Ganley, 30, Scott Charlton, 29, and Adrian Beale, 23, all lost their jobs.
Sean Brookes, Scott and Adrian were given their security jobs back after an appeal. But Sean Ganley and Craig are so furious that they have refused to appeal.
Craig said: "I wouldn't go back if they offered me £18,000 a week to work there."
The men stripped to the sound of Tom Jones singing the striptease song from hit film The Full Monty.
The spur-of-the-moment routine took place at the Beach House pub in High Street, Bognor, after DJ Mark Green egged them on.
The pub was packed with about 100 people when the five decided to get up and strut their stuff in front of a crowd of cheering women.
Mark, 38, from Hayling Island, said: "It wasn't at all planned, but they did it really well and everybody loved it.
"They danced in front of my disco to coloured flashing lights and thumping music and gave a really good show.
"They took their shirts and trousers off, but kept their underwear on. At the end, they turned round and did a moonie and everybody cheered.
"I'm shocked that they've been sacked. I think Butlins is just making a fool of itself."
Craig, of Bedford Row, Worthing, said: "We did it for a bit of a laugh, but it was out of uniform in our own time and it's none of Butlins' business what we do then.
"I can't believe they've sacked us for this. It's not even bad enough to warrant a verbal warning."
Sean said: "We were called in the next day to be sacked and told to leave Butlins that night.
"I think it's disgusting and I'm very angry. We were completely anonymous. How could we have brought Butlins into disrepute?
"The irony is that they were asking for staff volunteers to do a Full Monty routine in the nightclub at Butlins - and now we've been sacked for doing one in our own time."
Ian Nicholson, manager of the Beach House, said: "I think this is very harsh. There was no rudeness and everyone enjoyed it."
Clive Stephens, general manager of Butlins Family Entertainment Resort, Bognor, said: "I can confirm that five members of staff from Butlins in Bognor were dismissed for gross misconduct.
"All our employees represent Butlins and this decision reflects the high standards of behaviour we expect from our staff both on and off the resort.
"However, three members of the group chose to appeal against this decision and have been reinstated by the company."
Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.
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