Prime Minister Malcolm Turnbull's campaign against union lawlessness has suffered an embarrassing setback after the head of the government's controversial building industry watchdog resigned after admitting to breaching workplace laws.

Labor is now setting its sights on Employment Minister Michaelia Cash, arguing she should have stood down Australian Building and Construction Commission boss Nigel Hadgkiss sooner. But Senator Cash says while she was made aware of the allegations against Mr Hadgkiss almost a year ago they were unproven and he only admitted to wrongdoing this week.

Mr Hadgkiss came under immediate pressure to resign from his $426,000-a-year job after conceding on Tuesday to recklessly misrepresenting union rights to employers while he headed up a Fair Work office over a period of two years.

He breached section 503 of the Fair Work Act by publishing website material that misrepresented the rights of union officials during entry to premises to meet workers. He failed to correct the material despite concerns being raised by his staff.