The landmark cuts to weekend penalty rates in several industries will be phased in over the next four years, in a decision that has angered retailers and unions alike.

Australia's workplace umpire, the Fair Work Commission, has ruled that the reductions to existing penalty rates of up to "double time" paid to retail, fast food, hospitality and pharmacy staff will be phased in gradually and not take full effect until 2019 and 2020.

The first penalty rate cuts of five percentage points will begin next month.

Since the commission decided in February to slash Sunday penalty rates, the trade union movement and the business community have been at odds over how quickly the changes should be implemented.

"Retailers need a break and they need it now," National Retail Association chief Dominique Lamb said.

A shorter transition to reduced penalty rates would have been a "welcome relief", she said, as it would have allowed retailers to focus on improving customer service by having "more employees on the floor".

Russel Zimmerman, head of the Australian Retailers' Association, said businesses had been hoping for a two-year phase-in for the cuts, and were bitterly disappointed.

"Retailers wanted this phased in much more quickly so we can get on with the job of employing more people," he said. "What this will do is create an incredible amount of extra work for retailers, who won't be able to employ more people as quickly as they would like.

For full-time and part-time workers in the retail and pharmacy sectors, Sunday penalty rates cuts from 200 per cent to 150 per cent will be staggered until 2020.

Fast-food employees will have their 150 per cent Sunday rates cut over the next three years until 2019.

Hospitality workers' Sunday pay will gradually fall from 175 per cent to 150 per cent over that period.

Opposition Leader Bill Shorten said the decision "confirmed the worst fears of workers" - that cuts would begin next month. He called on the Turnbull government to support his private members' bill to stop the cuts.

"This is an appalling decision and comes at a time when wages are falling in real terms," Mr Shorten said. "It doesn't matter if the cuts are phased in over two or three years, the damage is the same – people will be losing real money."

But Employment Minister Michaelia Cash said the decision would help small business while affecting only three to four per cent of Australia's workforce.

"The adjustments to Sunday penalty rates will even the playing field for Australia's small businesses, which have to pay more for staff on Sundays than big businesses who do deals with big unions. This will help thousands of small businesses open their doors, serve customers and create jobs on Sundays," she said.

She called on Labor to respect the commission's independence and ditch its "scare campaign".

Trade unions have been fiercely fighting against the Fair Work Commission's decision to slash Sunday pay rates.

"Australian workers area already suffering as a result of stagnant wage growth," said Australian Council of Trade Unions secretary Sally McManus. "They can't afford a $1.42 billion wage cut."

Hospitality union United Voice said the decision to begin the cuts from July 1 this year meant 700,000 low-paid Australians who worked Sundays and public holidays and would now face their first pay cut within weeks. National secretary Jo-anne Schofield confirmed the union would be appealing the commission's "unfair" decision to cut Sunday rates at all.

"The system has completely failed the hundreds of thousands of Australians who give up their time with their loved ones to work on weekends and public holidays," Ms Schofield said.

Employers in the hotel and tourism sectors said they would have preferred a two-year phase-in period but they welcomed the certainty provided by the commission's ruling.

Former Labor minister and ACTU leader Martin Ferguson, now chairman of industry group Tourism Accommodation Australia, said he realised that reforming penalty rates was a tough decision "but ultimately this was essential."​

The Greens' Adam Bandt said the decision was "devastating news" for low-paid workers: "With profits up a massive 40 per cent this year but wages only 0.9 per cent, it beggars belief that business says it can't afford to pay penalty rates."