Employees at Catholic Healthcare have been threatened with disciplinary action if they cannot prove they have the right to work in Australia.

The letter also threatens to report workers to the Department of Immigration and Citizenship if they cannot prove they are Australian or have the right to work here. It also says Catholic Healthcare will withhold pay if staff cannot provide appropriate documentation within the allowed time.

The general manager of human resources at Catholic Healthcare, Sam Galluccio, confirmed he sent the letter to employees last month. He defended the actions and said the letter was part of an organisation-wide audit to ensure staff met the immigration requirements.

Secretary of the NSW and ACT branches of the Australian Services Union Sally McManus has attacked the church-run health service.

''This is a sign of the new Australia under Scott Morrison - if we have employers willing to be his immigration police, it sets the tone throughout the whole community,'' she said. ''You will have to prove you are an Aussie - that will cause division in the workplace.''

Mary Crock, professor at the University of Sydney and an expert in immigration law, described the letter as a reflection of the tougher attitude of the new federal government.

She said: ''I'm not aware of organisations being asked to do this in the past … this creates a really awkward atmosphere for agencies who are working with irregular migrants and doing outreach work in the community.'' Professor Crock also said that by next year, Australia was likely to have more than 30,000 people who could be regarded as irregular migrants. ''[They] will be living in the community with no right to work and in that context [this] is quite a threatening gesture,'' she said.

Mr Galluccio said Catholic Healthcare was providing some leeway for those who could not provide documentation straight away. He also said that reporting to the department would not occur ''unilaterally'' but ''it's one of the requirements''.

The ASU has written to Mr Galluccio claiming threats to withhold pay are in breach of the Fair Work Act. The office of the Minister for Immigration did not return calls.