Employer groups have been lobbying the minister to fix what she has described as an "absurd" situation, but with slim prospects of getting legislation through a hostile Senate, an alternative has emerged. Loading Employment lawyer Luis Izzo said dealing with the issue by way of a regulation would be easier than getting legislation through – although it could be challenged once Parliament resumes in February, when "either house has the ability to overrule it". "The process is the regulation is made, and it's binding – it takes effect – but an MP or senator can object to it," Mr Izzo said. "If there's a majority in the Senate or House to overrule it, the regulation is dead."

But, he said, the government could gain a political advantage as, "from an optics perspective, it might take a little bit more momentum to overturn something that's already in place". Once rubber stamped by the Governor-General, the regulation would take effect and the government could use the summer break to sell it as a sensible fix. Opposition Leader Bill Shorten has promised legislation to ensure workers employed through labour hire firms get the same pay and conditions as workers hired directly, if Labor wins government. Sydney University constitutional law professor Anne Twomey said the rules in the Senate – where most disallowance motions took place – provided that a regulation could be challenged within 15 sitting days of being tabled. Mr Izzo said the regulation would be "a step in the right direction" for the government to clarify the position of casual workers.

"It would then take a significant counter-manoeuvre by MPs in the Senate or House of Representatives to overturn it," he said. Third parties, such as trade unions, would also be able to challenge the regulation in court if they could argue its creation was beyond the power of the executive and constitutionally invalid. Mr Izzo said the risk of this happening would likely be greater if the regulation attempted to insert a definition of a casual worker into the act. The minister has the power to make regulations for any purpose "necessary or convenient" to carry out or give effect to the provisions of the Fair Work Act, but not to modify the act. "I think the pressing desire is to at least adderess the double dipping, because that's where there is a particular level of outrage," he said.

Ms O'Dwyer has intervened on behalf of the Commonwealth in a test case that seeks to clarify the double dipping issue, but an outcome is not expected before the election, due by May next year. The Federal Court case, brought by WorkPac against a former worker called Robert Rossato, is expected to end up in the High Court. Workplace law expert Andrew Stewart, a professor at the University of Adelaide, said the double dipping issue needed "a legislative fix" – but that this was unlikely. "If they introduce a bill to deal with this issue, they would have to face an immediate set of amendments," Professor Stewart said. "And that might not only produce effects very different from the one they wanted, but would almost certainly also involve Labour trying to reverse last year's penalty rate cuts."

He said there was "a desperate need" for a resolution as "the situation that we've got at the moment is completely unsustainable". "You've got potentially more than a million Australian employees who have casual status but arguably are not true casuals ... and therefore would be entitled to annual leave, sick leave etc. "That clearly is a situation that cannot be allowed to continue; it has to be sorted out one way or the other." Professor Stewart said it was unclear whether it would possible to address the issue retrospectively. ACTU Secretary Sally McManus said workers were finding themselves "stuck for years in casual roles while they do the same work as a full time or part time employee" and that employers should pay a price for "decades of abusing loopholes in our broken system to rip off workers".