Workers on Sunday penalty rates are “overcompensated” and should have their pay cut on 1 July, an industry lobby has told the Fair Work Commission.

The Australian Industry Group told the commission on Tuesday to cut the penalty rates immediately, saying they are “neither fair nor relevant”.

When the commission made the recommendation in February to cut penalty rates, it suggested “at least” two years would be appropriate.

Barrister Harry Dixon, acting for the Ai Group, urged the commission not to prolong the introduction date. “The commission should not entertain any further delay. The starting point is currently unfair, they are overcompensated,” Dixon said at the hearing in Melbourne.

“Unions have focused on interests of employees only and not the interests of employers.”

The commission is taking submissions about the best way to transition to lower Sunday penalty rates for the hospitality, retail, fast-food and pharmacy sectors.

Dixon argued only the fast-food industry should not get the full cut on 1 July, and should have a staged reduction in 2017 and 2018.

But the Shop, Distributive and Allied Employees’ Association and hospitality union United Voice have foreshadowed a judicial review into penalty rates, which the commission heard would take some time.

The commission in February recommended Sunday penalty rates be cut for workers on modern awards in the hospitality, retail, fast food and pharmacy sectors.

The federal government has told the commission, in a submission released in March, it should make an independent decision on how to implement the cuts.

But the government said “take-home pay orders” – which have been used in the past to minimise hardship in changes to modern awards – are “not available” in this case.

Labor said in its submission the penalty rate cut decision should be set aside and laws changed to ensure such a decision can never again be made.