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ACTU secretary Jeff Lawrence said the changes, which Deputy Prime Minister Julia Gillard unveiled in a speech yesterday, were a big step forward in protecting workers' rights and entitlements.

Court-imposed penalties for breaches of awards, enterprise agreements and the new employment standards would come after attempts to resolve the issue at the industrial umpire, Fair Work Australia, had failed. The court penalties mark an important shift and would allow the industrial division of the Federal Court and Federal Magistrates to issue an injunction or make an order "they consider appropriate" to fix breaches.

There would also be an informal small claims jurisdiction to deal with claims of up to $20,000.

Ms Gillard's speech unveiled stronger than expected dispute-settling powers for Fair Work Australia and comes just weeks before the Government introduces legislation to replace WorkChoices.

Ms Gillard has already released details on unfair dismissal laws for small business, which have been criticised by some as too pro-employer, and tough anti-strike rules.

The creation of new Australian Workplace Agreements was abolished this year.

The changes announced yesterday would allow compulsory arbitration - a key feature of the workplace system for most of the 20th century - in only limited cases.

Australian Mines and Metals Association (AMMA) workplace director Chris Platt said he was pleased by the decision.

Most employer groups appeared comfortable with the news.

But Ms Gillard did soften her stance to allow arbitration when a party persistently did not bargain in good faith.

There will also be greater rights for those in low-paid industries to have their disputes settled. In cases where industrial action has a "particularly negative or dangerous impact" there could also be arbitration.

Mr Lawrence said the changes gave real force to the collective bargaining rights Australian workers would have under the new system and were an important step in "killing off WorkChoices".

But there were wins for employers, with AMMA happy older industrial agreements, including the controversial AWAs, which were used widely in the mining industry, could continue to be used if the parties agreed. A union leader said this would allow AWAs to go on forever.

Labor's changes have been attacked by many unionists and the Greens as "WorkChoices-lite".

Missing from Ms Gillard's speech was detail on unfair dismissal and union right of entry to a workplace, which had been covered in confidential talks with employers and unions.