The proposals are part of Government plans to make it more difficult for illegal migrants to live and work in the UK.
Under the proposals, employers who are caught with an illegal worker face fines of up to £20,000, which is double the current penalty.
Annual employment verification checks for workers with limited leave to remain have also been simplified.
Immigration minister Mark Hoban (pictured) said the Government is committed to taking illegal employment.
"We will not allow the growth of a shadow economy for illegal migrants, so we are proposing to get tougher on employers who exploit illegal labour," Hoban said.
"At the same time, we want to make it easier for legitimate businesses by reducing the administrative costs of complying with right to work checks."
Proposals to toughen civil penalties for businesses employing illegal migrants are:
- An increase in the maximum penalty to £20,000 per illegal worker, targeted at those employers who repeatedly break the rules.
- Simplifying the way civil penalties are calculated.
- Simplifying the way unpaid penalties can be enforced in the civil courts.
- Measures to allow recovery of a civil penalty from directors and partners of limited liability businesses following failure to pay by the business.
Nick Rollason, the head of immigration at London law firm Kingsley Napley, welcomed the proposals but warned new employers could face difficulties.
"[Doing] away with the first warning process could mean that new employers and start-up businesses could now face penalties for first time inadvertent breaches without being given the opportunity to show they can be compliant," he said.
"And there are significant risks that by reducing the number of acceptable documents proving a person's right to work, some migrants who are lawful long-term residents without the new biometric residence permits will not be able to access employment."
The Government's consultation on the proposals will run until 20 August 2013.
