Mr Foley will tell the NSW Labor conference at Sydney Town Hall on Saturday that a government led by him will introduce "the heaviest fines in Australia".

They will be used to punish businesses – including head franchisors – guilty of ongoing, widespread and systemic wage theft.

"When there is systematic exploitation of workers in the workplace government has a responsibility to intervene," Mr Foley will say, according to a speech excerpt released by his office.

"Vulnerable young workers are being cheated out of a staggering amount of wages by unscrupulous bosses and it has to stop. We know the Liberals will never act – but Labor will."

Mr Foley will say that "entire chains are built on paying black market wages and the penalties are so low they think that exploiting workers is worth the risk; being caught is just the cost of doing business".

"Our new laws won't apply to genuine mistakes," he will say.

"Employers who do the right thing will benefit as they won't be competing with undercutting cheats. But we'll go after that minority whose business model is based on exploitation."

In April, Fair Work Ombudsman Natalie James told a parliamentary inquiry that some employers risked fines because they are not big enough to act as a deterrent.

For corporations the maximum penalty for a breach of the Fair Work Act is $63,000.

A spokesman for Mr Foley said the precise size of the new penalties he proposed for NSW was yet to be worked out but they would be "significantly" higher.

A package of measures to prevent the exploitation of young workers will be drawn up in consultation with the business community and unions.

A Fairfax Media/Four Corners investigation revealed 7-Eleven staff were being paid as little as $5 an hour often in 60 hour working weeks.

A separate investigation into Domino's and its franchisees uncovered widespread underpayment of wages and the deliberate underpayment of penalties.