Jacks owns Mitre 10 Mega in Dunedin and Mitre 10 in Mosgiel.
Authority member Christine Hickey released her decision yesterday,
concluding the tier 1 rate should be $19 per hour, and the tier 2 rate should be $21 per hour and no increase from September 1.
She also set an additional rate at $2 per hour.
Union membership currently sits at four out of a total staff of between 180 and 200.
The unprecedented action of the authority "fixing" the collective agreement rates came after almost six years of Jacks Hardware and First Union being unable to agree on a collective agreement.
The decision comes just 10 days after the hearing between the two parties.
At the hearing, the company offered starting pay rates of 25c and $1 above the minimum wage, amounting to $17.95 and $18.70 respectively for tier 1 and tier 2. It rejected the trade qualification clause.
Ms Hickey said if it set the rates Jacks proposed, nothing would change for at least 44 of its lowest paid staff.
The union wanted a base rate of $21.50 an hour (increasing to $22.50 an hour from September 1), $23 (increasing to $24 an hour from September 1) for tier 2 employees, and $3 extra for employees with a relevant trade qualification.
The union's claims were "too high" when compared with Retail NZ's figures and the rates paid by the two other Mitre 10 franchises in the South Island, Ms Hickey said.
She agreed with Jack's Hardware that it would be inappropriate to set artificially high wage rates as a punishment to the company.
"However, I consider that it is reasonable to take into account the period of time since a collective agreement could have been agreed to consider what wage rates could have been by now."
She used comparisons of Bunnings, other South Island Mitre 10s and Foodstuff stores in her decision.
First Union retail secretary Tali Williams said it was a "landmark case" in what was fair pay for a retail worker.
"It's an absolutely fair decision."
The union had a campaign on what workers deserve to be paid.
"It's been a long time coming. It's a warning to other employers who may refuse to negotiate a pay rise."
The unprecedented instruction to the authority to "fix" disagreements in collective agreement negotiations was part of an Employment Court decision released in February.
Jacks Hardware chief executive Neil Finn-House said he was pleased to have concluded collective agreement negotiations and felt the authority reached a fair outcome for the minimum wage rates.
"Most Kiwis will agree that it is important that local, New Zealand-owned and operated businesses are able to pay their employees rates that are locally comparable.
"Our objective at the hearing was to reach a fair outcome, consistent with market rates of comparable businesses in the South Island, which maintains our ability to reward and recognise our staff above and beyond the minimum pay rates that the collective will contain."
