The Federal Court has rejected a union bid to overturn the Fair Work Commission’s decision to slash Sunday penalty rates.

Unions representing hospitality and retail workers in June challenged the commission’s decision to cut penalty rates for workers in the fast food, hospitality, retail and pharmacy sectors, starting from July 1.

On Wednesday, Justice Mordy Bromberg said the Federal Court found no jurisdictional error in the way the commission went about its task.

The Federal Court found the commission met its legal obligations when it handed down its decision in February.

In a three-day hearing last month, lawyers for United Voice and the Shop, Distributive and Allied Employees Association argued the commission had failed to consider how cutting the rates would affect low-paid employees.

Business groups were confident the court would uphold the commission’s ruling.

The Australian Council of Trade Unions (ACTU) has estimated nearly 500,000 people will be affected by the changes, and allege those workers are losing up to $6000 a year.

The commission’s ruling cut Sunday pay rates for full-time and part-time hospitality workers from 175 per cent of their standard wage to 150 per cent.

In retail, the ruling reduces Sunday wages from 200 per cent of workers’ standard rate to 150 per cent, for both full-time and part-time staff.

For the fast food industry, it cuts pay for workers classed as “level one” from 150 per cent to 125 per cent above their standard rate.

In the retail and fast food industry, casuals would also have a pay cut, but in hospitality the rates would remain the same.

The public holiday cuts were to come into effect on July 1 this year.

The Sunday penalty rate cuts were to take effect gradually, but the commission wanted them implemented within a year of its decision.

Justice Bromberg said although the decisions to cut rates were unquestionably important to a large number of people, the court’s role was limited to finding errors in law.

“The court’s task is restricted to reviewing the process by which the Fair Work Commission arrived at those conclusions,” he said.

“The court’s task does not entail reviewing the correctness of the Fair Work Commission’s conclusions.

“In the view of the court, the Fair Work Commission’s decision, read as a whole, reveals no jurisdictional error.”

The Australian Retailers Association and Australian Industry Group welcomed the decision, saying it was time for organisations which were trying to overturn the penalty rate cut to accept the umpire’s call.

“Now that the full court of the Federal Court of Australia has upheld the Fair Work Commission’s Penalty Rates Decision, it is time for everyone to accept the decision of the independent umpire and move on,” AIG chief executive Innes Willox said in a statement.

– with AAP, ABC