The Fair Work Agency — What This New Enforcement Body Means for Employers

The Fair Work Agency is a new enforcement body launching in April 2026. It consolidates functions that were previously split across multiple bodies — the Insolvency Service, HMRC, and the Department for Business, Energy and Industrial Strategy — into a single, coordinated enforcement agency focused on employment rights.

Here’s what makes the Fair Work Agency different from the ICO, the EHRC, or other regulators you might already deal with: it has proactive investigation powers. It doesn’t wait for someone to file a complaint. The agency can walk into a business, review payroll records, check contracts, and investigate whether employment law is being followed — all without a complaint triggering the inspection.

For UK employers, this is a fundamental shift in enforcement culture.

What the Fair Work Agency Is

The Fair Work Agency is a new government body established to enforce:

• Employment rights: Minimum wage, holiday pay, working hours, contract issues
• Employee rights under the Employment Rights Act 2025: Day-one rights, SSP, harassment prevention duties
• National minimum wage and apprentice minimum wage
• Agency worker rights
• Zero-hours contract enforcement

It’s an amalgamation of existing enforcement functions that were scattered across different regulators. Before April 2026, NMW enforcement was primarily through HMRC compliance visits. Employment tribunal claims were handled by the employment tribunal system. If someone worked for an employment agency and wasn’t paid properly, enforcement was unclear. The Fair Work Agency consolidates all of this into one place.

Who’s in Scope

All UK employers with employees. There’s no size threshold. A business with one employee is as much a target as a business with 100. The enforcement focus will likely start with sectors known for compliance gaps: hospitality, retail, care, construction, and agriculture. But all employers can expect scrutiny.

Employment agencies, labour providers, and temporary workforce suppliers are also in scope — the agency has explicit powers to investigate worker treatment across supply chains.

What Happens If You Don’t Comply

If the Fair Work Agency identifies breaches (unpaid wages, NMW violations, SSP non-compliance, harassment prevention failures, incorrect contracts), it can:

Issue Compliance Notices

A formal notice requiring you to fix the issue within a specified timeframe. If you don’t comply, you face escalation to enforcement action.

Recover Unpaid Wages

If workers weren’t paid correctly, the agency can pursue recovery on their behalf. This is much faster than employees suing individually through tribunals.

Civil Enforcement

Injunctions, compliance orders, and other civil remedies to compel compliance.

Prosecution

For serious or persistent breaches, the agency can prosecute through the criminal justice system. This is rare, but it’s possible.

Financial Penalties

The exact penalty framework is still being finalised, but early indications are that significant breaches could trigger six-figure penalties for larger businesses and substantial penalties even for SMEs.

Reputational Damage

The Fair Work Agency is expected to publish enforcement data and may name businesses that are prosecuted. Public enforcement action damages reputation and can trigger customer or partner backlash.

Key Areas of Focus

Based on government guidance, the Fair Work Agency is likely to prioritise:

National Minimum Wage Compliance

Checking that all workers are paid at least minimum wage. This includes checking if tips are being counted toward minimum wage (they can’t be under the new tipping law), if deductions are being made inappropriately, and if apprentice minimum wage is being paid.

Holiday Pay

Ensuring workers are paid for statutory holiday and that holiday entitlements are being tracked and paid correctly. Accrued holiday not taken is a common violation.

Statutory Sick Pay

With SSP now due from day one (April 2026), the agency will check payroll records to confirm SSP is being calculated and paid correctly.

Employment Contracts

Reviewing whether contracts reflect the new framework (day-one rights, statutory probation provisions, updated SSP and paternity terms). Contracts that don’t match legislation are a red flag.

Harassment Prevention

Checking whether employers have documented harassment policies, whether staff have been trained, and whether there’s evidence of proactive prevention measures (not just reactive complaint handling).

Zero-Hours and Variable-Hours Arrangements

Investigating whether workers who should be offered guaranteed-hours contracts are being offered them, and whether zero-hours clauses are being used to avoid minimum standards.

Supply Chain and Outsourcing

If you use contractors, temporary workers, or labour agencies, the Fair Work Agency can investigate their practices. You may be held liable for contractor non-compliance if you knowingly benefit from breaches.

What to Do Now

1. Audit Your Payroll

Run a full payroll audit:

• Is every worker paid at least NMW / apprentice minimum wage?
• Are deductions being made? Are they legal? (Tax and NI yes, “uniform cleaning” or “breakage” is usually not).
• Are tips being counted toward minimum wage? (They can’t be after April 2026.)
• Are holiday entitlements being tracked and paid? Is holiday pay calculated correctly?
• Is SSP being calculated correctly for all employees?

If you find discrepancies, fix them now and consider whether to make arrears payments to workers. Being proactive is better than waiting for the Fair Work Agency to find the issues.

2. Ensure Employment Contracts Are Current

Every contract should reflect the new Employment Rights Act framework:

• Day-one rights
• Updated SSP terms
• Statutory probation provisions
• Paternity leave from day one

Contracts that pre-date the 2026 changes are a compliance red flag.

3. Document Your Harassment Prevention Measures

Create or update your harassment policy to show proactive prevention:

• Clear definition of harassment relevant to your sector
• Communication of the policy to all staff
• Training records (who’s been trained, when, on what topics)
• Risk assessment identifying harassment types relevant to your workplace
• Clear reporting mechanisms for affected individuals

4. Review Agency and Contractor Arrangements

If you use employment agencies, labour providers, or contractors, confirm they’re compliant with employment law. If you knowingly benefit from non-compliance, you may be investigated alongside them.

5. Create an Inspection Readiness Plan

Imagine the Fair Work Agency walks in tomorrow. What documents would they ask for? Can you produce them?

• Payroll records (last 12 months)
• Employment contracts for all staff
• Holiday tracking (accrued and taken)
• Absence records and SSP calculations
• Harassment policy and training records
• Records of worker pay above minimum wage

If you can’t produce these easily, your systems need improvement.

6. Train Your Managers and HR

Make sure managers and anyone in HR understand:

• National minimum wage (different rates for different age groups)
• Holiday pay entitlements and how to calculate them
• Statutory sick pay (from day one, from April 2026)
• Employment Rights Act changes
• Fair dismissal procedures
• Harassment prevention

7. Subscribe to Fair Work Agency Updates

When the agency launches in April 2026, it will publish guidance, enforcement data, and updates. Subscribe to get notified of changes or priorities.

Key Takeaways

The Fair Work Agency is not another bureaucratic body that only acts on complaints. It has proactive investigation powers and will inspect businesses unannounced. Compliance is not optional.

Most UK employers are already doing most of this right. You’re already calculating NMW, paying holiday pay, and treating staff fairly. But there are compliance gaps in almost every business — often small things like holiday accrual being tracked incorrectly or apprentices being paid slightly below the apprentice minimum wage because the system hasn’t been updated.

Find these gaps now and fix them. Being proactive puts you in a far better position than being discovered through an inspection.

If you want a structured review of your employment practices against all four phases of the Employment Rights Act and Fair Work Agency enforcement priorities, Bartram HR screens your contracts, policies, payroll practices, and documents against the regulations and delivers a clear remediation roadmap.

The Fair Work Agency is coming. Prepare now.