Solution to the wrong problem
Tell me something. Isn't all this simply solving the wrong end of a non-existent problem, by getting just another angle to introduce ID cards? Every time I hear those ID-Cards politicians scream, I seem to remember all the comedic jokes made about "papers please", using a phony german accent.
Make it compulsory for employers to have insurance for the employee. Insurance-companies are usually pretty thorough in checking the name of the insured party, simply because they are afraid of dishing out money they can wriggle away from. Solves three problems in one go. A) Gives employers better rights and security, B) Makes sure the checking is actually done, and C) needs no additional identity cards.
If they make the insurance contract a standardized one, I'm fairly certain there is a possibility of a Schengen/EU standard for these things, and maybe we can even get a central EU database (no, such a database should not be outsourced to neighter Langley, Virginia, nor to India or China).
As for penalty, I think the correct penalty for failing to insure your employers against accidents should be immediate and permanent revocation of you right to be an employer. Why? Because this employer has proved without a shed of doubt that they care so little for their employees well-being that it's obvious they are unfit for this purpose. This aswell solves the problem in a simple manner, by making the problem go away. Permanently. Since the COST of such insurance would vary with the level of protection from injury the employee has, it will balance itself out as a nice motivator for employres to make sure proper steps are taken to avoid accidents. (Gives the beancounters a nice headache aswell, since it would no longer be cheaper to use insufficient safety measures). Yet another problem solved.
This is simple, enforcable, and it isn't yet another excuse to introduce a society where the government can get YET ANOTHER "big brother sees you"-act into life. I wonder when they are going to make RFID-cards compulsory, with scanners at every street corner and in every cash register?