Fair Work Commission’s ruling to cut rates of pay for Sunday and public holidays will stand after court dismisses appeal

This article is more than 2 years old

This article is more than 2 years old

Unions have lost a challenge to overturn cuts to Sunday penalty rates.

United Voice and the Shop, Distributive and Allied Employees Association had challenged the Fair Work Commission’s decision to cut penalty rate cuts in awards covering the hospitality and retail sectors, which applied from 1 July and will be phased in over three years.

The Fair Work Commission, in a ruling in February, argued the Sunday and public holiday rates no longer provided a “fair and relevant” minimum safety net.

Penalty rate cuts: long-weekend loss will run into millions for workers Read more

The commission instead chose to make cuts of 25% to 50% points in the retail, pharmacy, fast food and hospitality industries. Business groups argued the cuts would help boost employment and growth in the industry.

But the commission’s decision prompted a furious response from Labor and the unions, which feared it would hit Australia’s lowest paid and set a precedent for cuts in other industries.

The cuts were thought to affect 500,000 people a year. Unions alleged workers would lose up to $6,000 a year, although the cuts varied across industries.

On Wednesday United Voice, which represents hospitality workers, condemned the court’s decision to reject the challenge to the cuts. The union’s national secretary, Jo-anne Schofield, described the ruling as a “new low point for workers in Australia”.

“It shows that the laws in this country do not protect workers and are out of step with community values. Those laws have to change,” she said. “We pursued this appeal against the penalty rate cuts, to stand up for hospitality workers and for all workers in this country.

“We fear that employer groups will now continue to attempt to attack the weekend pay of workers in other industries.”

The Australian Retailers Association, which has campaigned for the cuts, welcomed the federal court’s decision. The group’s executive director, Russell Zimmerman, said reversing the cuts would have stifled employment growth in the retail industry.

“We now have a unanimous decision from a five-member full court of the federal court supporting the unanimous decision of a five-member full bench of the Fair Work Commission to reduce penalty rates,” Zimmerman said. “The ARA hopes the ALP and other political parties who are seeking to overturn this decision are sensible enough to accept the umpire’s decision and allow retailers to get on with the job of employing more people.”

On Wednesday, the opposition leader, Bill Shorten, called the decision “disappointing”. He has previously criticised the cuts for coming at a time when wages are falling in real terms.



Bill Shorten (@billshortenmp) Disappointing decision in the Federal Court. It's clear the best way to protect penalty rates is to vote Labor.

Australian Unions (@unionsaustralia) 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. #auspol #ausunions pic.twitter.com/AqTiIEPwKy

The federal court heard the case late last month but was restricted to only scrutinising the commission’s decision-making process, rather than the merits of the decision itself.

The unions had argued that the commission’s had “misconstrued its powers” by varying the awards without being satisfied that a “material change in circumstances” meant the award no longer met the “modern awards objective”.



The unions also argued the commission had ignored the relative living standards and needs of Australia’s low-paid workers, and had misconstrued the word “relevant” in its use of the phrase “fair and relevant safety net”.



Sunday penalty rate cuts the result of 'errors of law', federal court told Read more

The court rejected all of the unions’ arguments. The court’s decision was handed down on Wednesday morning by federal court justices Anthony North, Richard Tracey, Geoffrey Flick, Jayne Jagot and Mordecai Bromberg.

United Voice urged employers not to pass on the cuts to workers. The union said it would “keep challenging the system” so long as it failed to protect lowest paid.

“Our message to the government and the employer groups who mounted this sustained attack on the wages of hospitality workers is, ‘Our rights are not up for grabs and we will not stand by and watch you come after them’,” Schofield said. “We will continue to challenge this harsh and unfair pay cut and will continue to speak out on behalf of all workers.”