The forthcoming Immigration bill proposes that people found working illegally in England and Wales, will face up to six months in prison.
This could mean that instead of being taken to detention centres, illegal migrants will be processed through the courts before being taken to jail.
Takeaways and off-licences could lose their licences if they were found to be employing illegal workers. Officials are considering extending this provision to cover minicab drivers and operators.
Penalties include an unlimited fine and wages being seized as 'proceeds of crime'. The maximum sentence for employers found guilty is being raised to five years. Employers will not longer be able to state that that were unaware of any illegal employees. They are obliged to carry out proper right to work checks before employing any non-EEA nationals.
It has been stated that, Immigration Minister James Brokenshire said the new law would help fight perceptions of the UK as a "soft touch" destination.
'If you are here illegally, we will take action to stop you from working, renting a flat, opening a bank account or driving a car.
We will continue to crack down on abuse and build an immigration system that works in the best interests of the British people and those who play by the rules.
Illegal workers will face the prospect of a prison term and rogue employers could have their businesses closed, have their licences removed, or face prosecution if they continue to flout the law.'
Employers who continue to disregard the law and evade sanctions could see their business closed for up to 48 hours while they prove right-to-work checks have been conducted on staff. The worst offenders could be placed under "special measures" forcing businesses to remain shut or to carry out ongoing checks.
Precise details of the reform have not been given but it is expected to mean that the onus will now be on accused businesses to prove they carried out all relevant checks before employing an individual.