Rogue employers convicted of exploiting migrant workers will face being banned from recruiting any more staff from abroad, the home secretary, Jacqui Smith, promised yesterday.

She also told the Trades Union Congress that the immigration service would, in future, advise new migrant workers about their employment rights, including the value of a joining a trade union.

The promise to take a tougher approach on the enforcement of penalties against firms that employ illegal migrants came as Ms Smith named Professor David Metcalf, a London School of Economics industrial relations expert, as the first chairman of the migration advisory committee.

As chair of the committee he will advise the home secretary on the level of migration to Britain that is needed and draw up lists of high and lower skilled occupations that should be designated as shortage sectors which need to attract migrant workers.

Ms Smith said she hoped the body would ensure the debate on immigration could be conducted in future on the basis of evidence, rather than anecdote.

The establishment of the committee comes as the government plans to introduce an Australian-style points immigration system next year.

"The system, which will go live early next year, will give us a clear sense of the numbers of people entering the country, and will help match their skills with our needs," said Ms Smith. "It will ensure that those who benefit most from migration - employers and educational institutions - have a stake in ensuring the system isn't abused. When employers want to employ skilled migrants they will need our licence to do so, and we will be rigorous in our approach."

She said that when a firm applied to sponsor a migrant under the new system they would be asked whether they have any convictions for labour exploitation.

"We will use that pattern of behaviour when we decide how often to check they are playing by the rules. And when we spot bad behaviour we will make sure that the action we take in response is seamless across government," she said.

Although penalties against companies for employing illegal workers have been on the statute book since 1996 the regime has, up until now, only been lightly enforced.

The Home Office intends to introduce a system of sanctions, including a sliding scale of fines of up to £10,000 an illegal employee for repeat offenders. They could also face being downgraded as an official sponsor of migrant labour with prospective overseas employees warned of their status. Those who continue to offend would face being struck off the Home Office sponsorship register which would mean they could not legally bring any migrant worker to Britain.

Ms Smith said the Borders and Immigration Agency would be asked to help everyone who got a work permit to learn about their employment rights, including getting a "clear and early message" about the benefits of joining a trade union.