Unions lose legal challenge to penalty rate cuts in Federal Court

Published: 11 October 2017


The Federal Court has upheld cuts to penalty rates for hospitality, retail and fast-food workers, throwing out a challenge from unions.

According to the unions, close to half a million people will be affected by the ruling, which maintains the Fair Work Commission’s decision to drop Sunday and public holiday rates.

The Hospitality Union United Voice and the Shop, Distributive and Allied Employee’s Association launched the bid against industry groups to keep the previous penalty rates for Sundays and public holidays.

They argued the decision failed to take into account how slashing rates would affect low-paid employees.

But on Wednesday the court found no jurisdictional error in the commission’s conduct.

The Australian Unions group slammed the decision on Twitter, claiming the “system is broken.”

“The Federal Court has rejected union challenges to overturn the decision to cut #penaltyrates for hospitality, retail and fast-food workers. The system is broken. It’s time to change the rules,” the group wrote.

Under the ruling, full-time and part-time hospitality workers’ Sunday pay rates will be reduced from 175 percent of their standard wage to 150 percent.

Retail and pharmacy workers will see reduced Sunday rates from 200 percent to 150 percent, and fast-food workers classed as ‘level one’ will see the 150 percent rate on Sundays cut to 125 percent.

Public holiday rates will be slashed 25 percentage points from 250 percent to 225 percent for full-time and part-time employees in retail, fast food, pharmacy and hospitality workers.

Casual workers will receive penalty rate cuts in retail and fast food industries, but the rates remain unchanged for hospitality.

The cuts to public holiday rates were expected to come into effect from July 1 this year.

The commission says changes to Sunday penalty rates were to be introduced gradually.