Unions are pushing for 5-year prison sentences and multimillion-dollar fines for wage theft, but an employer group says it shouldn't be considered a crime at all

• Employers found to have underpaid their workers could face up to five years in prison and $1 million fines, under new rules proposed by Australia's largest union the ACTU.

• Under the proposal, those penalties would form a harsh new penalty reserved for those who have made "intentional, reckless or dishonest" underpayments to staff. Corporations could be fined up to $10 million.

• It comes after a string of high profile cases, particularly in the hospitality sector, including former Masterchef judge George Calombaris and his Made Establishment which was found to have underpaid staff $7.8 million earlier this year.

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If George Calombaris thought his fall from grace couldn't have been much worse, he's wrong.

The former Masterchef judge was fined $200,000 earlier this year as part of his punishment for underpaying staff $7.8 million in wages and super. Now, however, Australia's largest union the ACTU is urging the Attorney-General's Department to implement a harsher underpayment offence that would carry a five-year maximum prison sentence.

"The availability of [a higher] offence would encourage earlier pleas to the lesser, strict liability offence, where the higher offence was appropriately charged on the facts," the ACTU submission said, as reported by the AFR.

Under it, on top of prison time individuals could be fined $2 million while corporations could face penalties of up to $10 million.

"If the object of the current review is the deterrence of wrongdoing and encouragement of compliance, it cannot follow that an unreasonably high bar is set to attracting the stigma of criminality," the ACTU said.

Those harsher penalties, the ACTU suggested, should be faced by those who make "intentional, reckless or dishonest" underpayments.

There's no suggestion that the Calombaris case should be characterised as such, but the ACTU's recommendation does demonstrate what new penalties could potentially be applied to employers. And while the government discussion paper on wage theft is non-sector specific, it's the hospitality industry that has been littered with high profile cases – so much so that we had to restrict our list of restaurants to just those with celebrity chefs.

But those ACTU proposals, sure to be echoed by other groups, aren't the answer according to the Australian Industry Group, representing the nation's employers.

"Ai Group strongly opposes the introduction of criminal penalties for wage underpayments. While at first glance, the introduction of criminal penalties for underpayments might seem like a good idea, there are many reasons why this is not in anyone's interests and needs to be rejected," it said in a statement outlining its submission.

It has made the counter-argument that criminal charges will just make delay compensation for victims, with civil proceedings having to wait for criminal ones to finish. It's also argued that those penalties will prevent employers coming forward when they discover mistakes.

However, it's clear that there's plenty of appetite for more to be done. Even the Fair Work Ombudsman, the body that handed down Calombaris' $200,000 fine, told a Senate Estimates Committee last week that it "would have liked it to have been higher".

Admittedly, Calombaris faced other penalties too. Like three years of external auditing and having to speak publicly on the need for employers to pay their staff properly – as if that needed to be said. He also appears to have been cut from the "three musketeers", after his former colleagues, ex-judges Gary Mehigan and Matt Preston, were signed by the Seven Network for a new show without him.

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Given the public outrage about him and other high-profile cases, the ACTU's submission will likely find a receptive public audience.

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