Small business owners fear the Morrison government's plan to criminalise wage theft may unfairly target those who make "honest mistakes" and are demanding changes to the award system to make it easier for them to pay workers correctly.

Australia's industrial relations umpire Iain Ross says he understands the concerns, agreeing the system could be difficult to navigate.

Fair Work Commission president Iain Ross says more simplification is needed to help employers pay staff correctly. Credit:Pat Scala

"I do think we can do more to assist small business to meet their obligations and I agree with the proposition that most small business owners do try and do the right thing," said the Fair Work Commission president, who last year launched a review of the nation's award system.

Council of Small Business Organisations president Peter Strong said if the prime minister went ahead with criminal sanctions, he must also address the "complexity" of the modern award system, which he argued made it too easy to accidentally underpay staff.