The Fair Work Agency – A new era of employment law enforcement that all employers need to be aware of

14 May 2026

By Steven Eckett, Partner, Employment, Gilson Gray

In April 2026, the UK will see the launch of a new agency called the Fair Work Agency (FWA), designed to implement workers’ rights, and will mark a fundamental shift in the enforcement of employment rights. This forms part of the changes being implemented by the Employment Rights Act 2025.

The FWA will be an Executive Agency of the Department for Business and Trade. The Employment Rights Act 2025, gives the Secretary of State a series of functions to enforce employment rights, including the appointment of enforcement officers.

Matthew Taylor – a former adviser to Tony Blair – will head the new FWA, which will replace the functions of existing bodies. It will absorb their responsibilities in enforcing employment rights, for example, HM Revenue and Customs, the Gangmasters and Labour Abuse Authority, and the Employment Agency Standards Inspectorate.

The aim of the FWA is to improve workplace relations, which in place, it is hoped will benefit the British economy, and there will also be an access line to help employers navigate the Employment Rights Act 2025 and to ensure compliance.

The FWA will also sit side by side with ACAS, but will have greater enforcement powers as set out below. It will be funded by the Government, and only time will tell whether it will be adequately funded and resourced.

In terms of its functions, the FWA will be able to enforce National Minimum Wage underpayments, holiday pay underpayments, and statutory sick pay underpayments and all associated breaches.

As part of its remit, the FWA will also be able to issue notices of underpayments on employers, payable within 28 days, which can include penalties and fines of up to 200% of the value of the sums due, payable in addition to the underpayments. These penalties will be payable to the Government.

The new FWA will also have wide-ranging powers which will include:

• The power to access and inspect workplaces and request evidence of compliance with employment laws.
• The power to issue civil penalties for non-compliance.
• The power to order repayments to current and former impacted employees.
• Importantly the power to issue employment tribunal proceedings against employers – even if workers and employees do not want to do so. In addition, the FWA can provide legal assistance to a party (usually the affected worker/ employee or class of workers/employees) in employment tribunal proceedings.
• Recovering the cost of enforcement action from employers if successful at the employment tribunal.
• The implementation of an enforcement regime in respect of labour market criminal offences including fines and imprisonment.

Once in place, the FWA will be a strong, recognisable single brand which will assist workers who need help and assistance. As well as assisting workers in enforcing rights, it will also provide support to businesses on how to comply with the new laws introduced by the Employment Rights Act 2025.

Importantly, it will also have strong teeth to take tough enforcement action against rogue employers who exploit their workers in the arenas of the National Minimum Wage, holiday pay, statutory sick pay, and in preventing modern day slavery.

In order to promote transparency, the FWA will be required to produce an annual report on its work and also an enforcement strategy report every three years. These will be published and will be laid before the UK Parliament and the Northern Ireland Assembly where they will be subject to parliamentary scrutiny.

Tips for employers in preparation for the new Fair Work Agency

It cannot be overemphasised that employers who fail to take adequate action to prepare for the introduction of the FWA and ensure that they are compliant with the new Employment Rights Act 2025, will face major consequences.

As well as financial implications it can also include reputational damage as the FWA will have powers to name and shame employers who are in breach of their legal obligations in respect of the National Minimum Wage, holiday pay, Statutory sick pay and who commit modern day slavery atrocities. The FWA can go back for up to six years looking into any underpayments as well.

It is, therefore, highly recommended that employers take measures and steps to prepare for the new FWA and that employers:

• Undertake a complete compliance audit and check that their payroll records are up to date in respect of the National Minimum Wage, holiday pay and statutory sick pay obligations. Check that where there are no underpayments caused, for example by flexible working or salary sacrifice scheme arrangements.
• Using umbrella companies, conduct a thorough review of their arrangements to ensure that those umbrella companies are compliant with tax and employment law obligations. In addition, that safeguards are introduced to mitigate potential liability for PAYE through disguised remuneration tax avoidance schemes, facilitated by umbrella companies.
• Update and audit their payment policies and procedures to prevent any future potential underpayment issues.
• Review record keeping in these areas of pay aimed at demonstrating compliance if challenged by the workforce and/or the FWA.
• Have clear strategies in place in terms of dealing with potential breaches aimed at minimising the risk of exposure and reputational damage.
• Train staff, for example, managers, so that they understand their responsibilities and expectations when it comes to adhering to processes and policies.
• Communicate clearly to the workforce how pay and holiday pay are calculated and ensure that it is easy to ask questions or raise complaints internally relating to pay, and to ensure that the matter is not escalated to the FWA.

This article is part of a series being produced by Gilson Gray on the implementation of the Employment Rights Act 2025.

If you have any specific questions or concerns relating to complying with the new laws or in general about the Fair Work Agency, then contact Steven Eckett, Partner and Head of Employment, England. Email steven.eckett@gilsongray.com