Employment law has been shifting fast. New rules, updated rights, changing expectations. And as of 7 April 2026, a new government body is responsible for making sure businesses are actually following them.
It’s called the Fair Work Agency and it’s part of the government’s wider ‘Make Work Pay’ agenda, aimed at tackling workplace exploitation and raising standards across UK businesses.
It hasn’t received as much coverage as some of the other changes coming through the Employment Rights Act, so if it’s not on your radar yet, you’re not alone. Here’s everything you need to know and the practical steps worth taking to protect your business.
What is the Fair Work Agency and how is it different from what came before?
The Fair Work Agency (FWA) is a new government body that brings enforcement of key employment rights into one place. It sits within the Department for Business and Trade and was introduced through the Employment Rights Act, which gained Royal Assent on 18 December 2025.
Previously, employment law enforcement was split across three separate bodies:
- The Gangmasters and Labour Abuse Authority (GLAA) focused on protecting workers in high-risk sectors like agriculture and food processing from exploitation.
- The Employment Agency Standards Inspectorate (EAS) regulated employment agencies and businesses to ensure fair treatment of agency workers.
- HMRC’s National Minimum Wage team investigated underpayments of the National Minimum and Living Wage.
Because these teams operated independently, there was no joined-up view of a business’s overall compliance. An employer could be investigated by one body and fall under the radar of another. The Fair Work Agency changes that, creating a single central enforcement body with wider remit, coordinated powers and a sharper focus on everyday employment basics.
It also isn’t just about catching businesses out. It’s about creating a level playing field, and it serves as a resource that both employers and employees can turn to for help and guidance on employment rights.
Key areas the FWA will focus on include:
- Whether workers are paid at or above the National Minimum or Living Wage (factoring in unpaid time, deductions and uniform costs)
- Whether employees receive correct holiday pay, sick pay and other statutory entitlements
- Fair treatment and protection from exploitation
- Accurate, up-to-date records including payslips, contracts and right-to-work paperwork
- Proper agreements for businesses using agency workers, umbrella companies or labour providers
It’s also worth highlighting one area specifically: statutory holiday pay. This is the first time it will be properly enforced by a state body. Previously, employees had to take action themselves if holiday pay was withheld. That changes now, and it’s one of the most significant practical shifts for employers to be aware of.
What powers does the Fair Work Agency have?
The FWA has stronger, more joined-up powers than any of its predecessor bodies. Here’s what that means in practice:
Workplace inspections at any time. FWA officers can enter premises and conduct inspections without needing a formal complaint to trigger it. Obstructing an investigation or providing false information can result in unlimited fines and up to 51 weeks in prison.
Requesting documentation and evidence. The FWA can ask for employment contracts, payslips, timesheets, wage records, policy documents, meeting notes, medical certificates and more at any time. False or misleading documents carry the same serious penalties.
Fining employers for underpayment. Officers can issue Notices of Underpayment requiring repayment within 28 days, covering unpaid wages, Statutory Sick Pay, holiday pay and more, going back up to six years. The penalty is 200% of the total underpayment, capped at £20,000 per worker. Pay within 14 days and the penalty drops to 100%.
Publicly naming non-compliant businesses. The FWA can name and shame employers within a year of a case closing, adding reputational risk on top of any financial penalties.
Taking cases to employment tribunal. The FWA can bring civil proceedings on behalf of employees, removing the burden from the individual.
Legally enforcing behaviour change. Officers can issue Labour Market Enforcement Undertakings (voluntary agreements) or Labour Market Enforcement Orders (legally binding court orders). Breaching an Order is a criminal offence.
Recovering enforcement costs. The FWA can charge its own investigation costs back to non-compliant employers. Based on indicative figures (not yet confirmed), this could look like:
- Up to £1,000 for a simple breach: a standard letter or notice
- Up to £2,000 for a standard investigation taking a day or two to resolve
- £20,000+ for serious or long-running breaches that take weeks to resolve
Please note these rates are based on an estimated inspector rate of £150 to £200 per hour, and are indicative figures only, not confirmed rates.
When does the Fair Work Agency come into effect?
The Fair Work Agency came into force on 7 April 2026. As of this date, it can monitor businesses, open investigations and take action for any breaches. Employers and employees can also now contact the FWA directly for help and guidance.
There is also an important related change to be aware of: as of 6 April 2026, employers are legally required to maintain adequate holiday and holiday pay records for up to six years. If you haven’t already reviewed how your records are stored and for how long, this is a good moment to do so.
Why do the fair worker regulations matter, especially for small and medium-sized businesses?
Most compliance problems don’t come from big, obvious mistakes. They come from the everyday stuff: holiday calculations that vary depending on who’s doing them, employment contracts that haven’t been updated in years, or HR records spread across email threads and spreadsheets.
For SMEs, this matters more than it might for larger organisations. There’s often no dedicated legal or compliance function, and HR responsibilities fall to whoever has capacity, whether that’s a founder, an office manager, or a small HR team covering a lot of ground. The everyday admin gaps the FWA is looking at are more common in this context, and often harder to unpick quickly if you’re asked to show your working.
What do employers need to do now?
The Fair Work Agency hasn’t changed the rules, but it has put a sharper spotlight on whether employment basics are in place and easy to evidence. For most businesses, that’s less about learning new legislation and more about getting organised.
- Review your pay calculations and check everyone is paid at or above the correct minimum wage, factoring in unpaid time, deductions and uniform costs. Do the same for holiday pay, Statutory Sick Pay and other statutory payments.
- Check your records. Wages, hours and holiday records should be accurate, accessible and stored securely. From 6 April 2026, adequate holiday and holiday pay records must be kept for up to six years.
- Update employment contracts so every employee has written terms that reflect how they actually work and are paid, including part-time and casual staff.
- Review your written policies and make sure you have up-to-date policies covering holiday, sickness, working time and the use of agency or temporary workers.
- Make it easy for concerns to be raised. Employees should know how to flag issues about pay, holiday or treatment, and you should have a clear process for recording and following up.
- Check agency and umbrella worker arrangements to ensure written agreements are in place and that minimum pay and holiday requirements are being met.
- Brief your managers so that payroll, HR and people managers understand what the FWA is, which rights it enforces and what good record-keeping looks like in practice.
- If you operate in higher-risk sectors, also review your obligations under modern slavery legislation.
How can an HR information system help you stay on top of this?
If your HR admin is currently spread across spreadsheets and inboxes, now is a good time to bring it together. The areas the Fair Work Agency focuses on, including contracts, policies, holiday, pay records and documentation, are exactly the areas where a well-implemented HR information system makes a real difference.
With the right system in place, you can:
- Centralise contracts and policies so they’re not buried in inboxes or saved across different drives
- Track holiday and sickness clearly with balances and history accessible in one place
- Keep employment records organised, making it straightforward to demonstrate how decisions were made if questions arise
As the FWA sharpens its focus on everyday employment basics, having your HR records in good order and easy to access isn’t just good practice. It’s your best line of defence.
Not sure where your business stands? Speak to the HRCentral team and we’ll help you identify the gaps before the FWA does! We can also provide you with a compliant HR Information system, for compliant document storage.
For support please call us on 0118 324 2526 or email enquiries@hrcentral.co.uk
