The Attorney-General, who introduced the government's long-awaited overhaul of workplace law to Parliament last week, is facing pressure from both business and employee organisations over the Morrison government's plans to tackle wage theft.

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James Pearson, chief executive of the Australian Chamber of Commerce and Industry, the country's largest employer group, wrote to Mr Porter last week arguing for a two-year delay on some of the new laws.

"Small and family business owners won't have greater confidence to hire staff if they may face jail or a crippling fine for a genuine mistake or an accidental payroll error," Mr Pearson said in a statement.

The government's toughest criminal penalties will be reserved for only the worst cases of wage theft while its prohibition on advertising underpayment applies across the board, but only to wages below the national minimum of $19.84 an hour. Unions already have the power to inspect businesses' books if they apply to the Fair Work Commission, which the labour movement wants expanded.

A spokesman for the Fair Work Ombudsman said it had a special focus on protecting visa holders, who were involved in almost half the matters it brought to court last year.

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Labor's industrial spokesman, Tony Burke, accused the government of allowing wage cuts through a section of its industrial bill that permits wage deals that leave workers worse off if they agree and their employer is struggling because of the coronavirus for two years.

"The government's solution to people being underpaid is new legislation to deliver a wage cut," Mr Burke said. "We have too many people in this country who are being underpaid."

Despite mixed signals from the government it could drop the controversial section of the new law, Mr Burke said he did not believe the government had walked away from it.