simply enough - there is absolutely no legal way to employ someone cash in hand.
on top of the net you receive, employers must pay tax to the ATO on your behalf, pay 9% super (up to a limit, if you are not casual), pay worker's comp, pay payroll tax (if they are over a certain size, $600kpa wages in NSW). And meet all award requirements like overtime, loadings, allowances, annual leave, sick leave and long service leave.
the only possible grey area is if they claim you a "contractor" in which case you are a business and must pay for all of those things yourself. In almost every case that goes to court, the business claiming it's people are contractors loses, and they have to pay back costs of all the above.
how it happens is when the person just needs a job - when you need the money you accept the dodgy deal because its better than nothing. Its that simple.
don't take a cash job unless you have to. If you have to keep detailed records of every day you work, how long and what they paid you. When you no longer need that job you have the option to go after the employer for all of the back tax, wages, overtime, super etc etc. They will absolutely lose for sure, the amount you earned will be deemed net and they will habve to pay another 50-100% on top of what you got cash.
however....having said that....I would not be going after a night club or similar for back wages. You might find they have "people" and no-one needs that shit.