The Chamber of Commerce and Industry wants a ruling by Fair Work Australia which will see employees paid public holiday rates when Christmas holidays fall on a weekend to be reviewed.
This year Christmas Day, Boxing Day and New Years Day all fall on a weekend.
As a result, the state government is required to declare an extra day during the week as a public holiday.
CCI WA's manager of industrial relations, Marcia Kuhne said this means businesses will have to pay employees penalty rates for working on Christmas Day as well as the following Monday.
Yesterday's ruling by Fair Work Australia, rejected an application by the Australian Industry Group to prevent this type of "double dipping."
The decision will also cover future years when Australia Day falls on a weekend.
The Ai had tried to enforce an old clause in the manufacturing award that would have limited emplyers to paying penalties on three days over the Christmas break.
The tribunal removed the clause.
"It's yet another example of how the recent changes to the national IR system are not working and are bad for business," she said.
"Many businesses such as hospitals, aged care facilities, tourist resorts, restaurants, cafes and retailers are open over this period because for them it's one of the most important times of the year.
"It doesn't make sense to make it harder to do business during what is an already difficult trading environment with retail sales and consumer confidence down," she said.
The case covered manufacting, nursing, cleaning and banking.
Ai chief executive Heather Ridout said the decision will have wide-reaching implications for other industries.
