Federal intervention has failed to stop the ACT passing landmark legislation creating the new offence of industrial manslaughter.

Negligent employers face penalties of up to 25 years jail.

The offence is designed to target negligent and reckless behaviour which results in the death of an employee.

Individuals found guilty face lengthy prison terms, while corporations can be fined up to $5 million.

Unions have applauded the move, but business groups are outraged, with many threatening to move to NSW.

Federal Workplace Relations Minister Kevin Andrews has also protested.

But the ACT's Industrial Relations Minister Katy Gallagher says the new criminal offence sends a strong safety message.

"Our view is that the death of a worker in the workplace, when it can be attributed to an employer, is more than an OHS breach," she said.