The government is facing battles on two fronts as it enters the year’s final parliamentary sitting week, already wounded by its minority status.

However, it appears to have staved off any attempts to refer Peter Dutton to the high court, after the home affairs minister asked for another week of medical leave after injuring his arm mending a fence.

Labor has indicated it will continue to fight the government on its proposed backdoor encryption legislation, which Scott Morrison and Dutton had vowed to pass this week, after the government rejected an interim compromise measure.

The referral of Dutton and fellow Coalition MP Chris Crewther remains a live option, as the government struggles to convince the crossbench it is an unnecessary move, but Dutton’s prolonged absence makes it unlikely to occur this week. But it is the legislative front which has the minority Morrison government the most concerned, after a breakdown in bipartisan relations over its encryption bill.

After the bipartisan intelligence committee was unable to come to agreement on how to move forward with the legislation, the first time in a decade it has failed to come to an agreement, Labor committee MPs said they would issue a dissenting report.

The government accused Labor of going soft on terrorism and preventing intelligence agencies from gaining a much-needed tool in their fight against terrorists and child sex offenders.

In turn, Labor accused Morrison and Dutton of “blowing up” a compromise position which would have allowed the agencies the powers they requested, without rushing through the whole bill.

Labor’s position has won the admiration of the Law Council of Australia, with president-elect Arthur Moses warning the whole bill was “far too complex to be rammed through parliament in its entirety in just four days”.

“The parliament must proceed with caution to ensure we get it right. Rushed law can make bad law,” Moses said.

“Failing to properly scrutinise this bill risks unintended consequences which may impact on the privacy and rights of law-abiding Australian citizens, the media and corporate sector.

“Further, when dealing with sensitive and complicated legislation like this, it is completely inappropriate for any politician to accuse anyone of putting at risk national security because they are raising legitimate concerns about legislation.

“Allegations like that should not be thrown around like confetti in a democracy such as ours. The energy would be better spent on getting the legislation right.”

Mark Dreyfus said Labor had it in writing that the government had been prepared to compromise on an interim bill, as stated by Penny Wong on Sunday, until Morrison and Dutton “without warning … walked away from that compromise”.

“The Morrison government wants to have a fight on national security, an area the Abbott and Turnbull governments were prepared to reach reasonable compromises on,” Dreyfus said. “This is a desperate and dangerous attempt to distract from the chaos they are in.”

Without Labor, the government must negotiate with the crossbench in both the lower and upper houses to ensure its bill is passed.

Christopher Pyne met with the lower house crossbenchers on Thursday afternoon, just as parliament was about to rise for the week, to discuss its joint evacuate Nauru bill and the possibility it could join with Labor in referring Dutton to the high court over section 44 concerns.

After first threatening to refer others, including the Wentworth independent Kerryn Phelps to the court for payments received by doctors through Medicare, the government has since calmed its approach.

Key crossbenchers, including Julia Banks and Phelps, are still considering the proposal to refer Dutton and others to the court, Labor labelled the proceedings as “watch and wait”, while Morrison, in his last day in Argentina for the G20, said he believed it to be an all or none proposition.

“There are three other House members that have the same issues that have been suggested about Peter Dutton, so any principled position, any consistent position, anyone seeking to be truly fair about this would apply the same rule to all of those members,” he said.

“The government isn’t seeking to refer any of those members, but if the parliament sought to do so, then it would only be the principled thing to do to apply the same treatment to all members similarly affected.”

Once parliament rises at the end of next week, it will not sit again until mid-February, with just a handful of parliamentary sitting weeks scheduled before the expected May election.