He was the senator whose vote was pivotal to the Coalition's crusade to stamp out lawlessness in the building sector through the re-establishment of the Australian Building and Construction Commission.

But now Bob Day will be investigated by the workplace umpire amid claims he engaged in sham contracting before his home building empire went bust last year.

Employment Minister Michaelia Cash referred allegations to the Fair Work Ombudsman after her department raised a question mark over the former Family First senator's insistence that his workforce were paid as contractors.

Mr Day, who was a loud voice for liberalising workplace rules and reducing union influence on construction sites, was paying all sales staff at his Homes Australia group as independent contractors on commission-only pay.