Legislation to force companies to pay labour hire at the same rate as direct employees does not yet exist, but business groups have already mounted a national campaign against it.
Employment Minister Tony Burke says mining, petroleum, construction, farming, and small and large business groups have jumped the gun by criticising the government's planned "same job, same pay" laws.
He said their key concern — that employers would not be able to reward workers with more experience or who worked longer hours — was incorrect, and the government had not even finalised its policy.
"Yesterday was one of the … strangest debates I've ever found myself in because business was running a passionate campaign against a policy that the government is not proposing, that the government's not going to do," Mr Burke said.
"And to me, it would sound like a bad idea anyway."
Business groups ran national ads on TV warning against proposed workplace reforms to close a "loophole" allowing some employers to suppress wages using labour hire.
The ads warned a worker with a few months' experiences and two decades of experience would have to be paid the same, and also argued the changes could void conditions in worker enterprise agreements, such as overtime or incentive payments.
Mr Burke said suggestions the "same job, same pay" laws would affect family farms or other small businesses without an enterprise agreement made no sense.
"The loophole's a really simple one, which is: If an employer agrees with their workforce and registers, 'This should be the rate of pay,' you shouldn't then be able to go to a labour hire company and completely undercut what you have just agreed to."
Shadow Industrial Relations Minister Michaelia Cash said business groups had not overreacted, and the government's consultation paper suggested the laws would go much further than labour hire.
"If it's about closing a loophole it should be very narrowly defined," Senator Cash said.
"The employers are the job creators of this country, and perhaps instead of insulting them he should actually sit down with them properly, instead of the sham consultation they are undertaking at the moment."
