How to Prepare for the Fair Work Agency

Until now, employment law in the UK has mostly been enforced through individual complaints. An employee feels they’ve been treated unfairly, they raise a grievance or go to tribunal, and the employer responds. The system is reactive — nobody comes looking unless someone complains first.

That changes in April 2026. The Fair Work Agency is a new enforcement body with the power to investigate employers proactively — without waiting for a complaint. It’s part of the same employment law overhaul that introduces day-one rights and harassment prevention duties, but it deserves separate attention because it changes the enforcement model, not just the rules.

This guide walks you through what the Fair Work Agency does, what it can investigate, and the practical steps to make sure your business is ready before it launches.

What the Fair Work Agency Is

The Fair Work Agency consolidates several existing enforcement functions into a single body. Currently, enforcement of national minimum wage, holiday pay, employment agency regulations, and gangmaster licensing sits with different agencies. The FWA brings these together and adds new powers.

The critical difference from what came before: the FWA can investigate proactively. It doesn’t need a complaint, a tip-off, or a tribunal claim to trigger an investigation. It can choose to look at any employer, at any time, for any of the areas it covers.

This is a significant shift for SMEs accustomed to the idea that employment law enforcement is something that only happens when an employee takes action. The FWA can — and is expected to — target sectors and business types where non-compliance is common, regardless of whether individual workers have complained.

What It Can Investigate

The Fair Work Agency’s enforcement remit covers several areas that directly affect SMEs:

National minimum wage compliance. Are you paying at least the NMW for every hour worked? This includes checking for common errors: unpaid training time, deductions that take effective pay below minimum wage, incorrect age-band calculations, and apprenticeship rate misapplication. HMRC already investigates NMW — the FWA takes over and expands this.

Holiday pay. Are your workers receiving the correct holiday entitlement and pay? This catches businesses that calculate holiday pay incorrectly for workers with irregular hours, fail to include overtime or commission in holiday pay calculations, or use rolled-up holiday pay without proper contractual basis.

Statutory Sick Pay. From April 2026, SSP is payable from day one with no lower earnings limit. The FWA can check whether your payroll reflects this. Businesses that haven’t updated their SSP calculations are exposed.

Employment agency compliance. If you operate as or use an employment agency, the FWA enforces the conduct regulations — including transparency about terms, timely payment, and accurate record-keeping.

Gangmaster licensing. For businesses in agriculture, shellfish gathering, or food processing and packaging — the FWA takes over the Gangmasters and Labour Abuse Authority’s licensing functions.

The FWA’s remit may expand further as secondary legislation is published, but these are the confirmed areas from launch.

Why This Matters for SMEs

You might think a new enforcement body is primarily a concern for large employers or exploitative businesses. It’s not — and here’s why.

Proactive investigation means you can’t rely on “nobody’s complained.” Under the current system, a small business with good employee relationships might never face enforcement scrutiny even if some practices aren’t technically compliant. The FWA changes this by removing the complaint trigger. Your practices need to stand up to scrutiny whether or not your employees are happy.

SMEs are already the target of the existing enforcement it consolidates. National minimum wage inspections already disproportionately affect smaller businesses — they’re more likely to have calculation errors, informal arrangements, and incomplete records. The FWA makes this enforcement more coordinated, not less.

The areas it covers are where SME errors are most common. Holiday pay miscalculations, NMW errors for irregular hours, SSP mistakes — these are overwhelmingly SME issues. Larger employers typically have HR teams and payroll systems that handle these automatically. Smaller businesses are more likely to be running calculations manually or relying on assumptions that may not be correct.

It has investigation powers, not just complaint-handling. The FWA can request documentation, inspect premises, and take enforcement action. If you can’t produce evidence of compliance — documented pay records, holiday calculations, SSP payments — the investigation has nothing to work with except the gap in your records.

How to Prepare — Seven Practical Steps

1. Audit your minimum wage compliance

Check every employee’s effective hourly rate — not just their contracted rate, but what they actually receive after deductions. Common traps: requiring employees to purchase uniforms without reimbursement (which can take pay below NMW), unpaid training time, unpaid travel time that should count as working time, and sleep-in shifts where pay falls below minimum wage per hour actually worked.

If you employ anyone at or near the minimum wage — and in hospitality, retail, and care, that’s a large proportion of the workforce — this is your highest-priority check.

2. Review your holiday pay calculations

Holiday pay should be based on a worker’s normal remuneration, not just their basic pay. For workers with regular overtime, commission, or other variable pay, holiday pay needs to reflect what they’d normally earn — not just the base rate. The rules here are genuinely complex, and many businesses get them wrong. If your workers’ pay varies, check whether your holiday pay calculation accounts for that variation.

3. Update your SSP processes

From April 2026, SSP starts from day one with no waiting days and no lower earnings limit. If your payroll system or absence management process still applies three waiting days or excludes lower earners, update it before April. This is a systems change — talk to your payroll provider now, not when the first absence triggers an incorrect calculation.

4. Document everything

The FWA can request evidence. The best defence against any investigation is documentation that demonstrates compliance. This means:

• Pay records showing hours worked and rates paid, with calculations for anyone on variable hours
• Holiday records showing entitlement, days taken, and pay calculations
• SSP records showing payments from day one
• Contracts and written statements for all employees
• Policies that are current and accessible

If your documentation is informal, incomplete, or stored in someone’s inbox, now is the time to fix that. It doesn’t need to be elaborate — it needs to be accurate, complete, and retrievable.

5. Check your employment contracts and written statements

Every employee must receive a written statement of employment particulars from day one (this has been the law since April 2020, but compliance is patchy among SMEs). The statement must include specific information: pay, hours, holiday entitlement, sick pay, notice periods, and more. Check that yours are current, accurate, and have actually been issued.

6. Train your managers on pay compliance

Many NMW and holiday pay errors aren’t deliberate — they result from managers making decisions without understanding the legal implications. A manager who asks a new starter to shadow a colleague for a day “before they officially start” has just created an unpaid working time problem. A manager who approves holiday without checking the pay calculation has perpetuated an error that’s been there for years.

Managers don’t need to become employment lawyers. They need to understand the common traps and know when to check before making a decision.

7. Monitor FWA publications

Once the Fair Work Agency launches, it will publish enforcement priorities, guidance, and sector-specific alerts. Subscribe to its updates. The FWA’s early priorities will signal which areas face the most scrutiny — and which sectors are being targeted. Being aware of what they’re looking for is the first step in being prepared.

How the FWA Fits Into the Bigger Picture

The Fair Work Agency launches alongside Phase 1 of the employment law cascade — the same month that day-one SSP, day-one paternity leave, and day-one unfair dismissal rights (subject to probation) take effect. This is not a coincidence. The FWA is the enforcement mechanism for a significantly expanded set of employer obligations.

Six months later, the harassment prevention duty and extended tribunal time limits arrive. In January 2027, the unfair dismissal qualifying period drops to six months and zero-hours contract reforms take effect. Each phase adds obligations; the FWA is the body that can check whether you’re meeting them.

And employment law isn’t the only regulatory pressure. The same business dealing with the FWA may also need to think about GDPR compliance for employee records and, if it uses any AI in hiring or HR processes, the EU AI Act’s high-risk classification. The compliance burden is cumulative across domains.

What to Do First

If you only do one thing before April: audit your pay practices. Minimum wage compliance is the FWA’s most established enforcement area (inherited from HMRC) and the one where SME errors are most common. Get your NMW calculations right, make sure holiday pay reflects normal remuneration, and update your SSP for the day-one changes.

If you want a comprehensive view of where your employment practices stand against all four phases of the cascade, Bartram HR screens your contracts, policies, and processes and delivers a prioritised action plan. To stay informed about employment law changes and other regulatory updates, subscribe to our fortnightly newsletter.

The Fair Work Agency is coming whether you’re ready or not. The businesses that prepare now will barely notice it. The ones that don’t will find out about it the hard way.