The Home Office has today begun talks with industry figures on "tough" new legislation aimed at targeting rogue employers and stopping the flow of illegal workers into Britain.
Under the proposals unveiled in the consultation, businesses found to be employing people not registered to work in the UK could face jail terms and an unlimited fine.
Employers will also face civil penalties if they fail to carry out sufficient checks on their workers.
The proposals, due to come into force next year, are part of the government's illegal working action plan, coordinated with the Border and Immigration Agency.
"To combat illegal immigration it is not enough to stop illegal journeys. We have to close down the illegal jobs that tempt people to try their luck coming to Britain," said immigration minister Liam Byrne.
"That means making it easier for companies to check whether someone is here legally – but also coming down much harder on businesses which break the rules or turn a blind eye."
New regulations specified in the action plan include the introduction of biometric visas and compulsory identity cards for foreign nationals.
Commenting on the government's plans, the Trading Standards Institute's chief executive Ron Gainsford said that the association was "optimistic that these measures will not only help ensure fairness and protection for traders and consumers but will provide vital investment by central and local government".
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