Employers, particularly franchise chains, face stiff new penalties and a beefed up watchdog after reforms to protect vulnerable workers passed the Senate on Monday night.

The bill was introduced in response to Fairfax Media's exposure of rampant underpayment and exploitation of vulnerable workers stretching back to a joint Fairfax Media / Four Corners investigation of 7-Eleven as well as subsequent scandals involving prominent companies such as Caltex and Domino's.

Minister for Employment Michaelia Cash said the government's Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 would protect workers from unscrupulous employers.

"Our bill not only supports vulnerable workers, but also ensures businesses are operating on a level playing field," she said.