Jewellery chain Michael Hill says it underpaid staff by as much as $25 million over the past six years, making it the latest major company to confess to short-changing workers.

The revelation has raised new questions about whether the penalties for underpayment are a big enough deterrent to breaking the law.

Michael Hill's CEO Daniel Bracken has promised to reimburse staff. Credit:James Brickwood

Michael Hill, which employs about 2000 people in its 171 Australian stores, on Thursday said an initial review of store staff contracts and rosters instigated by its new chief executive Daniel Bracken found "non-compliance" with the applicable award rates.

A more detailed review by auditors PricewaterhouseCoopers is being undertaken "with urgency" to determine exactly how much each worker is owed, it said.