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Alert: Full Federal Court rejects union application to have penalty rate changes reversed

This morning, the Full Court of the Federal Court of Australia has released its decision rejecting the application of two unions to have the Fair Work Commission’s ruling, on changes to penalty rates in five modern awards, overturned.

The unions made their challenge to the Fair Work Commission ruling on two grounds.

In the summary document released by the Full Court, it explains that the first ground for the application was that the unions considered that section 156 of the Fair Work Act 2009 required that a ‘review’ of modern awards was conditional on “there being a material changed in circumstances since the conduct of an earlier review”.  This ground was rejected by the Full Court on the basis that it considered that the wording of section 156 did not contain words nor context to limit a ‘review’ to such circumstances.

The second ground related to allegations that “the Fair Work Commission had not properly understood the nature of the inquiry required under s 134 of the Fair Work Act which specifies the “modern award objective”.  The unions argued that the Commission had ‘misconstrued’ the meaning of the word ‘relevant’ in the phrase “fair and relevant minimum safety net”, and that the Fair Work Commission had failed to take into account low income earners and ‘relative living standards’ in coming to its decision to reduce penalty rates.  The unions further alleged that the decision was “legally unreasonable”.  All such grounds for the application were rejected, with the Full Court being satisfied that there was no jurisdictional error in the Fair Work Commission’s decision.

The Application was dismissed.

Accordingly, Employers should take note that the changes to Sunday penalty rates and/or public holiday penalty rates in the following awards will remain in effect:

  • Hospitality Industry (General) Award 2010
  • Fast Food Industry Award 2010
  • General Retail Industry Award 2010
  • Pharmacy Industry Award 2010
  • Restaurant Industry Award 2010

If you have any questions regarding the changes to one of the affected Awards, please contact one of our lawyers for a discussion.

Aitken Legal