Workplace Minister Eric Abetz has moved to quash fears the government is planning to target weekend penalty rates after a junior minister said they were on the government's radar.
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However several backbenchers spoke out for change after Assistant Infrastructure Minister Jamie Briggs told a small business audience that penalty rates were unfair and a policy "area we must reform".
But a spokesman for Mr Abetz told Fairfax Media that the government had "no plans" to scrap penalty rates.
"Penalty rates are set by the Fair Work Commission and the government has no plans to change this," said the spokesman in a statement.
"It is up to the commission to determine the appropriate rates, based on the evidence put to it."
But Labor said that Mr Briggs had let the "cat out of the bag" and revealed the government's plan to cut penalty rates for millions of Australian workers.
Labor's workplace spokesman, Brendan O'Connor, said the government would start with reducing penalty rates for cafeterias, but that would be a "Trojan horse" for other workers and would eventually lead to scrapping penalties for "nurses and paramedics".
"Let's remember this minister, Jamie Briggs, was the principle of architect of WorkChoices during the Howard year," Mr O'Connor told Fairfax Media.
The Coalition is still haunted by the spectre of former prime minister John Howard's WorkChoices policy. As opposition leader in 2010, Tony Abbott declared the plan ''dead, buried and cremated'' and said the Coalition would never seek to reintroduce it.
But there has long been an internal push in the Coalition to address the penalty rates issue, particularly for the tourism and hospitality sectors, which enjoy peak trading times on weekends.
Backbenchers Russell Broadbent and Dan Tehan have come out in support of Mr Briggs' call for change.
Mr Broadbent told Fairfax Media that penalty rates were an "issue" in his country electorate of McMillan in regional Victoria.
"Jamie's always been a supporter of a more flexible labour market, along with the rest of us, we've got whole communities not opening on weekends because they can't afford to pay penalty rates," he said.
But he said he backed "sector-by-sector" decisions and said nurses who wanted to work Sundays to make extra money should not be curtailed from doing so.
"That doesn't mean we can be accused of WorkChoices Mark 11, we just want job opportunities across the board, and where jobs aren't available because of penalty rates, we want that discussion to happen," he said.
Mr Broadbent said the government would have to abide by community opinion should it not accept a change to penalty rates, but warned "small business will continue to suffer".
His colleague Mr Tehan called for a "mature debate" and said it was vital to ensure that "penalty rates are not a penalty on employment".
"This costs jobs and we need to address it," he said.
"Ultimately these are decisions for the FWC but we must encourage business to present their case because there is no doubt this is hurting employment especially youth employment," he said.