Prime Minister Malcolm Turnbull wants to jail union officials and employers who make illegitimate secret payments.

Mr Turnbull held a press conference on Monday alongside his Employment Minister Michaelia Cash to unveil plans to penalise employers and union officials found to have made payments other than for clearly legitimate purposes.

The proposed changes would also require full disclosure of legitimate payments.

“Trade unions have a solemn, legal, moral, fiduciary duty to act in the best interests of their members,” Mr Turnbull told reporters in Canberra.

“We have seen through the Heydon royal commission and subsequently unions have let their members down and big unions have traded their rights away in return for payments.”

Payments with the intent to corrupt would carry penalties of up to 10 years in prison and $900,000 for individuals, while sentences of up to two years and $90,000 would be on the table for other illegitimate payments.

Senator Cash said under current laws, bribery was often difficult to prove.

“Employees should be aware and should have full knowledge of any payments that are made between their employer and a union,” she said.

“When you look at the level of penalty, it should send a very, very clear message to any employer or any union who wants to indulge in secretive payments.

“It is wrong and compromises the integrity and lawfulness of the workplace.”

Turnbull and Cash said the reforms would be a test for Opposition Leader Bill Shorten.

But Mr Shorten was busy putting a bill before parliament aimed at stopping future cuts to penalty rates in the wake of the Fair Work Commission's decision on Sunday rates in hospitality and retail.

“What I say to the Prime Minister is use whatever distraction that you think is necessary. Use every possible dishonest distraction you have in your book. Put up whatever story you want,” he said.

“But on this issue, when it comes to defending working families in this country, the living standards of working families, we will not be deterred or put off.”

CFMEU National Secretary Dave Noonan also said the PM was trying to move attention away from penalty rates.

“Mr Turnbull is desperate to avoid the penalty rates issue because he knows that the public know that the Liberal Party really want to get rid of penalty rates,” Mr Noonan told Sky News Business.

The Prime Minister will introduce the payments legislation on Wednesday.