A new enforcement body is now actively overseeing employment rights across the UK — and it has powers that many employers haven’t fully registered yet. If you run a business and employ staff, this matters to you.
Here’s what the Fair Work Agency is, what it can do, and, more importantly, what you should be doing right now.
What Is the Fair Work Agency?
The Fair Work Agency (FWA) launched on 7 April 2026 as part of the Employment Rights Act 2025. It’s a single government enforcement body, created by bringing together three previously separate organisations:
– HMRC’s National Minimum Wage enforcement team
– The Employment Agency Standards Inspectorate (EASI)
– The Gangmasters and Labour Abuse Authority (GLAA)
Before the FWA, enforcement was fragmented. Different agencies had different priorities, different processes, and often didn’t communicate with each other. Compliance gaps, particularly around holiday pay and statutory sick pay, frequently went unchallenged simply because workers couldn’t afford to take their employer to tribunal.
That’s changed now.
Why This Is Different From What Came Before
The FWA doesn’t need an employee complaint to open an investigation. It can walk into your business, inspect your records, and audit your payroll without prior notice and without anyone having raised a grievance.
That’s a fundamental shift. Most previous enforcement was reactive. This is proactive.
On top of that, the FWA can bring employment tribunal claims on a worker’s behalf, even if that worker has chosen not to pursue a claim themselves. Workers who previously had no route to justice because of cost or fear now effectively have the government acting for them.
What Can the FWA Actually Do?
The powers are substantial:
– Enter your premises without warning to inspect records
– Demand payroll, contracts, timesheets, rotas, and holiday records
– Issue a Notice of Underpayment requiring repayment within 28 days
– Add a civil penalty of up to 200% of the underpayment, capped at £20,000 per worker
– Bring tribunal claims on behalf of workers, even without their involvement
– Investigate historical breaches going back up to six years
– Name and shame non-compliant employers publicly
– Pursue criminal charges in the most serious cases, with unlimited fines
The 200% penalty is worth pausing on. If the FWA finds you’ve underpaid a worker by £5,000, you could face a penalty of £10,000 on top of the repayment. Multiply that across several employees and the numbers get uncomfortable quickly.
What’s Currently in Scope?
The FWA launched with responsibility for:
– National Minimum Wage and National Living Wage compliance
– Statutory Sick Pay (SSP) now enforceable from day one, with no waiting period
– Employment agency standards
– Labour exploitation and modern slavery
Holiday pay enforcement is being phased in and is expected to come into scope in 2027. However, the record-keeping obligation for holiday pay is already live, see below.
The Record-Keeping Change That’s Already in Force
From 6 April 2026, employers are legally required to keep holiday and annual leave records for six years. This includes:
– Leave taken by each worker
– Holiday pay received
– Any payment in lieu of outstanding leave on termination
This applies to all workers, including those on irregular hours, zero-hours contracts, and part-time arrangements groups where holiday pay has historically been most prone to error.
The FWA can inspect these records now. The fact that active holiday pay enforcement doesn’t begin until 2027 doesn’t protect you from scrutiny of your record-keeping today.
Who Is the FWA Targeting?
The Government has described 2026/27 as a transitional year, with the FWA focused on helping employers comply as well as enforcing the law. Prosecution is reserved for the most serious cases.
That said, don’t read that as breathing room. “Enhanced business as usual” still means inspections, and the FWA has over 550 inspectors. Sectors with historically high rates of non-compliance hospitality, care, retail, construction, and businesses using agency labour are likely to attract closer attention first.
What Should You Do Now? A Practical Checklist
You don’t need to overhaul everything overnight, but these are the areas to address as a priority:
1. Audit your minimum wage calculations
Review pay for all workers, including those paid salaries where actual hours worked could push effective hourly rates below the NMW. Common traps include unpaid travel time, deductions that reduce net pay below minimum, and salary sacrifice arrangements.
2. Review your SSP processes
SSP is now payable from day one. If your payroll system or HR process still references a three-day waiting period, update it immediately.
3. Start keeping holiday records properly
If you don’t already have a system for recording leave taken, pay received, and any termination payments for holiday entitlement, put one in place now. Spreadsheets are fine if they’re accurate and retained for six years.
4. Check your agency worker arrangements
If you use temporary or agency staff, review compliance with the Agency Worker Regulations 2010. The FWA has specific oversight here, and enforcement of AWR has historically been weak — that’s about to change.
5. Document everything
The FWA’s best-case scenario for your business is an inspection where you can produce clean, complete records going back six years. That’s also your best defence.
The Bigger Picture
The Fair Work Agency is part of the Government’s wider Make Work Pay agenda. The intent is clear: strengthen workers’ rights, make enforcement consistent, and remove the cost barrier that previously stopped many workers from pursuing legitimate claims.
For compliant employers, this should ultimately level the playing field. Businesses that cut corners on wages or working conditions have historically undercut those who do things properly. The FWA is designed to change that.
For everyone else, the message is straightforward: the risk of getting this wrong has gone up significantly. The era of hoping nobody notices is over.
Not Sure Where You Stand?
Navigating employment law compliance alongside running a business isn’t straightforward, particularly for SMEs without a dedicated HR or legal function.
At Atria, we work with business owners to identify compliance risks before they become enforcement problems whether that’s a payroll review, help getting your record-keeping in order, or simply talking through what the changes mean for your specific situation.
Get in touch with the team at Atria to find out where your business stands.
This article is for informational purposes and reflects the legislation and guidance in force as of June 2026. It does not constitute legal advice. For advice specific to your circumstances, please speak to a qualified professional.
