What the Fair Work Agency means for employers

The Fair Work Agency (FWA) is a new enforcement agency that launched on 7 April 2026. It is an executive agency of the Department for Business, Innovation, Science and Trade: the Employment Rights Act 2025 gives the labour market enforcement functions to the Secretary of State, who exercises them through the FWA. It brings together several existing enforcement organisations into a single agency responsible for enforcing employment rights across Great Britain.

The FWA is chaired by Matthew Taylor, author of the 2017 Taylor Review of Modern Working Practices. It was created by the Employment Rights Act 2025 as part of the government's Make Work Pay programme.

What the FWA replaces

The Fair Work Agency consolidates enforcement functions that were previously spread across four separate organisations:

• HMRC's National Minimum Wage enforcement team, which investigates underpayment complaints and runs proactive compliance checks
• the Employment Agency Standards Inspectorate (EAS), which enforced the rules on how employment agencies and employment businesses operate
• the Gangmasters and Labour Abuse Authority (GLAA), which licensed labour providers in agriculture, shellfish gathering and food processing and investigated labour exploitation
• the Director of Labour Market Enforcement, who set the strategic direction for the three bodies above

By combining these functions, the FWA aims to provide a single point of contact for workers and employers, reduce duplication, and strengthen enforcement. It also gains new powers that none of the predecessor bodies held individually.

EAS and GLAA cases transferred to the FWA when it launched on 7 April 2026. HMRC keeps National Minimum Wage cases until that function transfers in April 2027. You do not need to take any action: the relevant body will contact you with updated case references.

What the FWA enforces

The FWA has a wider remit than any of its predecessors. Its enforcement responsibilities cover:

• The National Minimum Wage and National Living Wage. The FWA takes over HMRC's role in investigating underpayment, issuing notices of underpayment and imposing financial penalties. HMRC continues NMW enforcement during a transitional year, and the function moves to the FWA in April 2027.
• Holiday pay under the Working Time Regulations 1998, which previously relied almost entirely on individual tribunal claims. This new state enforcement is expected in 2027, once the necessary regulations are made.
• Statutory Sick Pay, a new enforcement power created by the Employment Rights Act 2025, also expected in 2027 once regulations are made.
• The rules on how employment agencies operate, including fees, transparency and worker rights.
• Licensing of labour providers in regulated sectors, which continues under the FWA.
• Umbrella company practices: the FWA can investigate and act against non-compliant umbrella companies.
• Unpaid tribunal awards: the FWA can pursue employers who fail to pay compensation awarded by employment tribunals.

How the FWA enforces the rules

The FWA has a range of enforcement tools available to it. Enforcement can be proactive (the FWA decides to investigate a sector or employer) or reactive (responding to a worker complaint).

• It can inspect workplaces, examine payroll records, interview workers and request documents. Obstructing an inspection is a criminal offence.
• It can serve enforcement notices requiring you to take specific steps to comply within a set time.
• It can impose financial penalties, including up to 200% of the arrears for NMW underpayment.
• It can publish the names of employers found to have breached employment rights, including in NMW naming rounds.
• In serious cases, particularly labour exploitation and gangmaster licensing offences, it can prosecute.
• It can act on behalf of workers to recover unpaid employment tribunal awards.

What employers should do to prepare

If you already comply with employment law, the FWA should not change your day-to-day operations. However, the creation of a single enforcement body with expanded powers means that non-compliance is more likely to be detected and acted upon. Check these areas.

Audit your National Minimum Wage compliance

NMW enforcement is the FWA's highest-volume area. Common compliance failures include:

• Not accounting for uniform or equipment costs that reduce pay below NMW
• Incorrectly calculating pay for salaried staff who work additional hours
• Failing to increase rates when age thresholds change (for example, when a worker turns 21)
• Treating accommodation above the offset limit as part of pay
• Not paying for all working time, including time spent on mandatory training, security checks, or handovers

Review holiday pay compliance

This is a new area of state enforcement. Previously, workers could only challenge holiday pay through individual tribunal claims. The FWA will be able to investigate and enforce proactively (anticipated 2027). Check that:

• All workers receive at least 5.6 weeks of paid holiday per year
• Holiday pay is calculated correctly -- for workers with variable hours, this must reflect their actual earnings, including overtime and commission
• Workers are not discouraged from taking holiday
• Rolled-up holiday pay, if used, is calculated and paid correctly

Ensure Statutory Sick Pay compliance

Under the Employment Rights Act 2025, SSP is payable from the first full day of sickness with no lower earnings limit. The FWA will be able to enforce SSP compliance directly (anticipated 2027). Confirm that:

• Your payroll system pays SSP from the first qualifying day (no waiting days)
• All employees are eligible regardless of their earnings
• The rate is calculated correctly (80% of weekly earnings or the flat rate, whichever is lower)
• Your sickness absence policy reflects the current rules

Check agency and umbrella company arrangements

If you use employment agencies or umbrella companies, you should:

• Verify that your agencies hold any required licences (particularly in agriculture, food processing, and shellfish gathering)
• Check that umbrella companies you work with are transparent about pay deductions
• Ensure agency workers receive their day-one entitlements
• Review your arrangements to confirm no party in the supply chain is facilitating non-compliance