The Government has confirmed the creation of a new Fair Work Agency (FWA), due to launch in April 2026, which will significantly change how employment rights are enforced in the UK.
The FWA will bring together enforcement functions currently carried out by HMRC (National Minimum Wage), the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority, creating a single, more powerful enforcement body.
The FWA is intended to replace the current fragmented system of enforcement with a more proactive and coordinated approach. In practice, this means employers are likely to see greater scrutiny and stronger penalties for non-compliance.
Once operational, the FWA is expected to be able to:
- Investigate employers proactively (not just following complaints)
- Require access to pay records and electronic systems and enter premises to inspect them
- Issue notices of underpayment for holiday pay, SSP and NMW
- Impose financial penalties of up to 200% of underpaid sums, subject to a maximum of £20,000 for each individual and a minimum of £100
- Apply for court orders where breaches continue
- In some cases, bring employment tribunal claims on behalf of workers
Enforcement activity is expected to focus on:
- National Minimum Wage compliance
- Holiday pay calculations (especially for variable hours and pay)
- Statutory Sick Pay administration
- Zero-hours and agency worker arrangements
- Failure to comply with tribunal awards or settlement agreements
- Poor or incomplete employment records
What employers should do now to prepare
Although it is expected that the FWA won’t be fully operational from April 2026 and is likely to take several years of implementation, preparation should start now to ensure legal compliance:
- Review pay practices – check NMW, holiday pay and SSP calculations
- Get records in order – ensure wage, hours and holiday records are accurate and accessible
- Check contracts and policies – make sure they reflect actual working arrangements
- Act quickly on issues – correcting underpayments early will matter
The precise scope of enforcement will become clearer as further guidance is issued and we will continue to provide updates as further detail emerges.
The Fair Work Agency represents one of the most significant shifts in employment enforcement in recent years. Employers who prepare early by strengthening systems, records and compliance processes will be best placed to manage risk and avoid costly penalties once the new regime comes into force.
