The Albanese government’s laws to protect penalty rates go further than intended and could lead to the scrapping of decades-old conditions that allow employers to roll up penalties into higher pay, risking a shakeup for millions of workers from chefs to graduate lawyers.

Workplace Relations Minister Amanda Rishworth introduced the Protecting Penalty and Overtime Rates Bill on Thursday to stop employers’ current Fair Work Commission bids to introduce higher pay rates in the retail, banking and clerks awards to absorb penalties and overtime.