From 7th April 2026, the Fair Work Agency launches. This will be a single, central body responsible for enforcing key workplace rights. It has been created as an executive agency of the Department for Business and Trade to bring together a number of previously separate enforcement functions under one roof. Its responsibilities are currently handled by
- The National Minimum Wage enforcement team at HMRC
- The Employment Agency Standards Inspectorate
- The Gangmasters and Labour Abuse Authority
- The Director of Labour Market Enforcement
The Agency will also regulate umbrella companies as defined in the Employment Rights Act 2025, although this is not expected to start until 2027.
As the Agency combines a number of enforcement bodies, this means that inspections and inquiries will become more joined up and potentially more frequent. While employers will not necessarily face new substantive employment rights obligations, they are likely to experience more co-ordinated, proactive and visible enforcement of existing rules, with increased pace and scope.
Why is the Agency being introduced?
The current enforcement model has evolved over time, with multiple bodies established as the need arose to oversee different employment rights. This has been inefficient and confusing for both workers and employers.
The establishment of the Agency creates a single “onestopshop” for enforcement that should make things clearer and fairer for all involved. The Agency will also provide support to businesses on employment law compliance, helping create a level playing field where those who want to do the right thing are not undercut by those who do not.
Areas of enforcement
The areas where the Agency will enforce compliance include:
- The National Minimum Wage
- Holiday pay, including rolled-up holiday pay rights for part-year and other non-typical workers
- Statutory Sick Pay (SSP) (Expected to be phased in)
- Agency worker protections (Expected to be phased in)
- Labour exploitation and modern slavery regulations including aspects of the Modern Slavery Act 2015
Strengthening enforcement powers
The Agency is being given a wide range of investigative powers to help it carry out its remit. These include the power to enter premises (subject to statutory safeguards), request access to records and carry out interviews with workers.
It is important to note that if an employer knowingly or recklessly produces false documents, intentionally obstructs enforcement action or fails to comply with an enforcement requirement without reasonable excuse, this may constitute a criminal offence.
Where enforcement officers find that employers have underpaid their workers, they will be able to issue Notices of Underpayment, requiring the employer to pay workers their due, and a penalty to government. The penalty will typically be 200% of the underpayment subject to a minimum charge of £100 and a maximum of £20,000 per worker (reflecting the existing National Minimum Wage enforcement regime).
An enforcement regime in respect of labour market criminal offences (based on the Immigration Act 2016) involves:
- Labour Market Enforcement Undertakings (voluntary compliance);
- Labour Market Enforcement Orders
Breach of an Order is a criminal offence that can result in fines or imprisonment.
The Agency will also have the ability to recover enforcement costs from employers where enforcement action has been taken for non-compliance, subject to further regulations.
In a significant development, the Agency will be able to bring proceedings in the employment tribunal on a worker’s behalf, and to offer legal advice and assistance where an individual is involved in a civil legal case related to employment or trade union law. This represents a shift towards state-supported enforcement, rather than reliance solely on individuals’ claims.
Greater scrutiny of payroll and HR accuracy
Although the Agency’s remit is wide, enforcement is likely to focus on:
- Payroll details
- Working time records
- Holiday pay calculations
- Statutory Sick Pay administration
- Consistency between HR policy and practice
A significant proportion of enforcement action arises from technical errors rather than deliberate breaches. These may include miscalculating holiday pay or failing to record travel time between sites. Expert guidance on pay systems and record keeping can help mitigate these risks.
Who is most at risk of investigation?
Employers are more likely to be on the Agency’s radar if they:
- use variable or irregular hours;
- employ agency staff or outsource labour;
- manage payroll and HR systems separately;
- operate multiple sites with inconsistent practices, or
- rely on overtime, oncall work or shift patterns.
In addition, sectors with historically higher levels of non-compliance may be subject to targeted or proactive enforcement activity.
What to do now
The clarification of the Agency’s powers and operations continues, but employers already have enough information start preparing for its introduction.
The steps that can be taken now include:
1. Review compliance with all existing employment rights
Given the wide remit of the Agency, employers should review all pay-related and working time practices, including:
- National Minimum Wage records and calculations
- Holiday pay methodologies
- Statutory Sick Pay (particularly with the of introduction of Day One entitlement from April 2026)
- How working time is tracked and calculated
- Deductions and pay-related benefits
2. Audit payroll accuracy and recordkeeping
Mismatched payroll data is a common trigger for enforcement action. Employers should ensure that payroll systems align with actual working practices.
3. Identify areas where policies and practice diverge
Where organisations operate across multiple sites, policies and practices should be harmonised to reduce compliance risks.
4. Prepare for faster and firmer enforcement
Employers should familiarise themselves with the Agency’s likely inspection processes and be ready to respond promptly to information requests. Seeking advice from an employment law specialist may assist in readiness.
5. Train managers and payroll teams
Given the Agency’s powers to enter premises, access records and interview workers, it is essential that managers and HR/payroll teams understand:
• record-keeping requirements;
• the importance of accuracy; and
• how to respond appropriately to enforcement activity.
6. Monitor further government guidance
Further guidance is expected ahead of and following implementation. This will provide additional clarity on enforcement priorities, tribunal involvement and operational detail.
