Fair Work Agency

Fair Work Agency

A New Era for Workplace Rights Enforcement

The UK’s labour market is entering a major shift following the introduction of the Employment Rights Act 2025. One key introduction is that of the Fair Work Agency (FWA) on 07 April 2026. The Fair Work Agency is a new body designed to simplify the enforcement of employment rights and ensure fair treatment for workers.

Why was the Fair Work Agency created?

For years, the enforcement of basic rights such as holiday pay, statutory sick pay, and the minimum wage has been handled by multiple, fragmented bodies, including:

• HM Revenue & Customs’ Minimum Wage Unit;
• The Gangmasters & Labour Abuse Authority; and
• The Employment Agency Standards Inspectorate.

This fragmented system often leaves workers unsure where to turn and allows law-breaking Employers to slip through the cracks. The Fair Work Agency aims to streamline enforcement by bringing all these functions under a single body, making it easier to protect workers and uphold fair competition amongst Employers.

The Government have stated that “operational” matters such as the transfer of functions from existing agencies to the Fair Work Agency were under consideration and that some kind of transitional period was likely. For instance, transferring National Minimum Wage enforcement from HMRC to the Fair Work Agency will take time, and HMRC may continue performing this function for a while after the Fair Work Agency is established. Initially, officers from existing agencies will move into equivalent roles at the Fair Work Agency.

As soon as reasonably practicable after the end of each financial year, the Secretary of State will be required to publish an annual report for that year setting out an assessment of the extent to which:

• The enforcement functions were exercised; and
• The effect on the scale and nature of non-compliance during that year.

Fair Work Agency’s Enforcement Powers:

In terms of investigatory powers, the Fair Work Agency will have the power to:

• Require individuals to attend a meeting and answer questions, where it reasonably believes the individual can provide information necessary for any enforcement purpose;
• Require individuals to provide information or documents by a specified date, where the Fair Work Agency reasonably believes that the person can provide the information or document(s) and it is necessary for any enforcement purpose.

Enforcement officers will also have the power to enter any premises (although a warrant will be required to enter an Office/Residence) to inspect any documents, to require any person on the premises to produce documents that are reasonably believed to be on the premises and within that person’s possession or control, or to access any computer or other equipment, including software, used to process or store information. Such power may only be exercised at a reasonable time, unless there are grounds to suspect that delaying such entry may frustrate the purpose of entering the premises.

When a breach occurs, known as a Labour Market Offence, the Fair Work Agency could issue a notice identifying the offence, explaining the reasons, and inviting the Employer to provide a Labour Market Enforcement (LME) undertaking. Officers of an Employer may also have personal liability if the offence was committed with their consent, responsibility, or neglect. A Labour Market Enforcement undertaking can last up to two years but may be discharged earlier. When discharged early, the Fair Work Agency must notify the subject and any other interested parties.

An application may be made for a Labour Market Enforcement order in either of the following circumstances:

• The Fair Work Agency has given the Proposed Respondent a notice inviting them to enter into an LME undertaking and should they fail to do so within the negotiation period of 14 days following the notice (or any longer period that may be agreed), the Proposed Respondent shall have given an Labour Market Enforcement undertaking but has failed to comply.

A prohibition, restriction or requirement may only be included in an LME undertaking if it is just and reasonable, and if one of the following is satisfied:

• It is for the purpose of preventing or reducing the risk of the individual not complying with relevant labour market legislation;
• It is for the purpose of bringing to the attention of interested persons the existence of the LME undertaking, the circumstances in which it was given and any action taken (or not taken) by the individual to comply; and/or
• It is of any other description specified in regulations.

Under the Employment Rights Act 2025, new criminal offences will be brought into force as a result of the Fair Work Agency. This includes:

• Failing to comply with a labour market enforcement order (in accordance with section 139).
• Providing false information or documents (in accordance with section 140).; and
• Obstructing the exercise of an enforcement function (in accordance with section 142).

There will be a defence available for providing false information or documents where the Secretary of State certifies that the conduct in question was necessary in the interests of national security, for the purposes of preventing or detecting serious crime or in the interests of the economic wellbeing of the UK (in accordance with section 141).

What effect will the Fair Work Agency have on Employees

Whilst Employees already have legal rights to the minimum wage, holiday pay, and sick pay, the enforcement element of a particular breach has often been challenging. The Fair Work Agency changes that by giving a single body the power to investigate Employers, inspect records and workplaces, recover unpaid wages, and issue penalties against non-compliant Employers. By consolidating multiple enforcement bodies into a single agency, the Fair Work Agency should make it easier to understand who enforces which rights and make it simpler to raise concerns.

It is being proposed that where a worker is entitled to bring a claim before an Employment Tribunal in England, Wales, or Scotland, rather frequently the Employee has not got the funding to bring such claim in the Employment Tribunal. The Fair Workers Agency, the Secretary of State may decide to bring the claim on the worker’s behalf. This power does not apply where a notice of underpayment has already been issued, nor does it extend to claims relating to agricultural wages in Scotland or Wales. Any reference to the Secretary of State includes an enforcement officer.

While Tribunal awards could still be made in the worker’s favour, the burden and risk of bringing a claim may no longer fall entirely on the individual. The Fair Work Agency is expected to focus on sectors with higher levels of non-compliance, such as hospitality, social care, agriculture, and parts of the gig economy. Employees in these sectors are more likely to benefit from Proactive inspections rather than complaint-based enforcement and oversight of exploitative agency practices. This represents a shift from a reactive system to one that actively looks for problems.

What effect will the Fair Work Agency have on Employers

Employers can expect more proactive enforcement under the Fair Work Agency. The Fair Work Agency will have powers to inspect workplaces and employment records, investigate non-compliance without waiting for individual complaints, issue penalties and fines, and recover unpaid wages. This marks a shift away from a largely complaint-driven system toward active regulation, particularly in sectors where breaches of employment law are more common.

A greater focus on record-keeping and compliance will be essential. Employers will need to ensure that pay, working time, holiday entitlement, and employment status records are accurate and up to date. Poor or incomplete documentation is likely to attract attention, especially where it masks underpayment of wages or holiday pay, misclassification of workers as self-employed, or agency worker breaches. Even well-intentioned Employers may face enforcement action if records cannot clearly demonstrate compliance.

In practical terms, Employers should take steps now to reduce risk. This includes auditing pay, holiday, and working time practices, reviewing employment status and agency arrangements, strengthening internal compliance and training, and preparing for inspections or information requests. Early compliance is likely to be far less costly and disruptive than responding to enforcement action later.

Will it be a Success? Challenges and Debates

The Fair Work Agency consolidates multiple enforcement bodies into a single agency with clear powers, which should make enforcement faster, more consistent, and easier for workers to access. By targeting high-risk sectors, recovering unpaid wages, and bringing claims on behalf of workers, it has the potential to deter Employers and improve compliance across the labour market. For employees, this could make rights real, rather than just legal theory, and for compliant Employers, it could level the playing field.

Success will depend on adequate resourcing, staffing, and expertise. If the agency is underfunded, enforcement could remain slow and patchy. The effectiveness will also hinge on strong collaboration with tribunals, local authorities, and other regulators, and clear communication so both workers and Employers understand how it operates. There’s also the risk that Employers may view it as punitive rather than constructive, which could create friction.

Kerseys Solicitors in Ipswich at [email protected] or telephone 01473 213311 or
Kerseys Solicitors in Felixstowe at [email protected] on 01394 834557 or
Kerseys Solicitors in Woodbridge at [email protected] on 01394 813732 or
Kerseys Solicitors in Colchester at [email protected] on 01206 584584 or
Kerseys Solicitors in Stowmarket at [email protected] on 01449 613631 or

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