The Commission handed down the much anticipated decision affecting hospitality, pharmacy, retail and fast food workers on Thursday morning. 

Commission president Iain Ross acknowledged hardship mitigation would be required for employees however the form of relief is yet to be decided. 

Full-time and part-time workers in retail will have their Sunday penalty rates dropped from 200 per cent to 150 per cent of their standard hourly rate, while casuals will go from 200 per cent to 175 per cent.

Hospitality employees will face a reduction in Sunday pay from 175 per cent to 150 per cent, while casual hospitality workers' pay will remain unchanged.

Fast-food employees' Sunday rates will go from 150 per cent to 125 per cent for full-time and part-time staff, and casuals will go from 200 per cent to 175 per cent.

Public holiday penalty rate will be reduced from 250 per cent to 225 per cent.

“Generally speaking for many workers Sunday work has a higher disutility than Saturday work though the extent of the disutility is much less than in times past,” Mr Ross said.

“We have decided that the existing Sunday penalty rates … do not achieve the modern award objective as they do not provide a fair and relevant minimum safety net.”

The Commission accepted the case of the Productivity Commission that reduced penalty rates could increase employment however “this is difficult to quantify”, and also accepted the case put forward by businesses that a reduction would increase the level and range of services on Sundays and public holidays.

Ballarat Trades Hall secretary Brett Edgington said the ruling was a “kick in the guts” for the workers who were “lucky enough to receive penalty rates”. 

Mr Edgington challenged the case put forward by businesses that a reduction to penalty rates would spur an increase in employment and said to open on these days was a case of “supply and demand.”

“Places open on Sunday because it’s profitable. Ultimately it comes around to bite them because the very people who spend money in their businesses now have less money in their pockets.

“We know with illegal payments and black economy that there is already a significant part of the economy that are not even getting penalty rates.

“For the people lucky enough to be receiving them this will have massive ramifications.”

Commerce Ballarat chair David Wright said the decision struck a balance that benefited both employers and employees.

Mr Wright said Commerce Ballarat expected its member businesses to pass the penalty rates win on to staff through additional hours or by hiring new employees.

“Because we’re in a 24/7, seven day a week economy we certainly support our members working within that emerging economy and hopefully this ease in penalty rates will allow them to do that which in turn will make them more competitive.

“It’s a great opportunity for all businesses to be looking at what they’re paying their staff and ensure they are paying their staff the correct rates, we would expect our members to look at opportunities to provide their current staff with more shifts or expand their operations in some way to give their employees greater opportunity.”

The state government has made a submission to the Fair Work Commission “strongly opposing” any penalty rate cuts.