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Federal Court Challenge Penalty Rate Cut

Federal Court Challenge Penalty Rate Cut

ACTU commence legal challenge regarding penalty rate cut.

7th July 2017
Reading Time: 2 minutes

Only five days following the Fair Work Commissions’ penalty rate cuts coming into effect, the Victorian union United Voice, have launched a challenge against workers’ Sunday and public holiday penalty rate reduction.

Concerned about how changes to penalty rates will impact your business? Get in touch with an experienced business lawyer.


The Fair Work Commission’s’ decision regarding penalty rates affects full, part-time or casual staff working in the retail, fast food, restaurant, hospitality and pharmaceutical industry. Although the penalty rate cuts, as of 1 July 2017, have been introduced they will not be completely implemented until 2019 or 2020, depending on the industry.

A more substantive breakdown on the Fair Work Commission’s decision regarding the penalty rate cut is explored in our previous guide on Changes Starting July 1, 2017. It must be noted that employees employed under an Enterprise Bargaining Agreements (EBA) need to ensure they are aware of how these changes will eventually impact on their employment agreements.

The Federal Court

The union, United Voice, argues that these award changes have had the biggest impact on the lowest paid employees. Further, the question whether the Fair Work Commission acted within its power in determining the award and whether the decision was reasonable.

The ACTU has backed this appeal, arguing that since the commission’s decision does not protect the lowest paid workers rendering the law broken. ACTU boss, Ged Kearney, claimed that the commission’s decision will be continually challenged until the decision to cut wages is reversed.

Federal Court Judge, Mordy Bromberg agreed on the need for the case to be expedited based on the nature of the claim. The judge has stated that a case will be heard by a full bench of three or five judges in September of this year.

Final Thoughts

It appears that both employees and employers will be waiting a long while before a decision is determined regarding the legality of the penalty rate cuts. In the meantime, business owners will need to be aware of the changes, effective 1 July 2017, and manage employee scheduling appropriately. Employees need to be aware of the impact that these changes will have, depending on their employment status and industry they are employed in.

Let us know your thoughts this latest challenge to penalty rate changes by tagging us at #lawpath or @lawpath.

Zachary Swan

Zac is a consultant at Lawpath, Australia’s largest and fastest growing online legal platform. Since joining Lawpath, Zac has assisted 1000s of startups and small business’s with their legal needs.