The Federal Court rejected a legal bid to overturn the Fair Work Commission’s (FWC) decision to cut penalty rates for hospitality, fast food, retail and pharmacy employees.

The cuts, which were announced in February, will be phased in over three years. As part of the cuts, Sunday penalty rates have been reduced by 5 per cent, with a further 10 per cent cut to occur in both 2018 and 2019.

The penalty rate cuts were upheld by the Federal Court, who ruled in October that the FWC had met its legal obligations when deciding on the cuts.

Union group United Voice said the Court’s ruling was a “low blow’” for workers. National secretary Jo-ann Schofield said, “We pursued this appeal against the penalty rate cuts to stand up for hospitality workers and for all workers in this country.

“We will continue to challenge this harsh and unfair pay cut and will continue to speak out on behalf of all workers,” she said.

Other industry groups have welcomed the ruling, saying the cuts are required for small businesses to remain competitive in the market.

Ombudsman Kate Carnell said small business operators will be relived at the decision and that the cuts level the playing field in competition against big business.

“Small businesses don’t have the capacity to negotiate enterprise agreements and continue to grapple with the most complex award system in the world.”

She added, “Everyone should respect the decision of the independent umpire; otherwise the integrity of the system is undermined.”