PM David Cameron will say that it has become “too easy” for migrants not entitled to be in the country to exploit loopholes reports BBC.
At the moment, firms can be fined up to £20,000 for employing illegal workers.
Labour said more needed to be done to protect the country’s borders, and called for laws to tackle exploitation.
The proposal to treat the wages of illegal workers as proceeds of crime forms part of what the prime minister will say is a “tougher but fairer” approach to immigration that will be adopted by the Conservative government.
However, the scale of the challenge facing ministers in reducing levels of legal immigration will be highlighted again when the latest official figures on net migration are published.
Net migration rose to 298,000 in the year to September 2014, well above the levels anticipated by the Conservatives – who set a goal before the 2010 election of reducing numbers to less than 100,000, a target they acknowledge they have failed to meet.
Mr Cameron will see first-hand efforts to combat illegal immigration on Thursday when he visits a premises in London shortly after it has been raided by immigration officials.
He will say the government is determined to “control and reduce” immigration, saying criminalising illegal workers must go hand-in-hand with other measures to lower demand for migrant labour, such as boosting the skills of UK workers.