The Fair Work Agency launched on 7 April 2026 as the UK's single enforcement body for employment rights, and it hasn't had anywhere near the coverage of other Employment Rights Act changes. If it's not on your radar yet, you're not alone, but it's already live, already investigating, and already has more power than the three agencies it replaced.
What the Fair Work Agency actually is
The FWA consolidates enforcement previously split across the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority, and HMRC's National Minimum Wage team into one body, created under Part 5 of the Employment Rights Act 2025. Its remit currently covers holiday pay, statutory sick pay, agency worker conduct and modern slavery in labour supply chains, with National Minimum Wage enforcement continuing under HMRC for now and transferring across in April 2027.
Unlike its predecessors, the FWA has been built with proactive investigation in mind, not just complaint response. It can enter premises, demand documents and information, issue penalty notices for systemic non-compliance, bring civil proceedings on behalf of workers, and publicly name employers found to be in breach, using the same approach as the existing minimum wage naming scheme. The government has explicitly framed 2026 to 2027 as a "transitional year" as its full powers phase in, which means its remit is only going to widen from here.
Why this matters more than it looks like it does
Most compliance failures aren't dramatic. They're the everyday stuff: holiday pay calculated differently depending on who's doing the sums, contracts that haven't been updated in years, or records scattered across email threads and spreadsheets rather than kept in one place. That's exactly the territory the Fair Work Agency is built to find, because it's shifting enforcement from reactive, someone has to complain first, to proactive, the agency can look for it.
Holiday pay sits near the top of its enforcement priorities, largely because the correct calculation method for workers with variable hours has been settled by case law for some time, yet many employers still get it wrong. For a small business, an audit finding on holiday pay doesn't stay small. It typically applies across your whole workforce and often back-dates, which turns a modest, ongoing error into a significant one-off liability the moment it's flagged.
What this means for your business
The FWA being new doesn't mean the risk is theoretical. Its investigatory powers are already in force, and only 20% of SMEs currently rate regulatory compliance as an organisational priority, compared with around a third of larger firms, according to CIPD's Spring 2026 Labour Market Report, which means most of the market is currently under-prepared for a body specifically designed to find that gap. The practical fix isn't complicated: get your holiday pay calculation method checked, make sure contracts reflect current entitlements, and keep records in one place rather than scattered across systems.
If compliance administration like this isn't where you want to spend your time as a founder, it's one of the clearer arguments for a model where an employer of record carries that burden rather than sitting on your desk alongside everything else you're running.
FAQ
When did the Fair Work Agency start operating? It launched on 7 April 2026, taking over enforcement functions previously split across the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority.
Does the Fair Work Agency enforce the National Minimum Wage? Not yet directly. HMRC continues to handle National Minimum Wage enforcement under a contracting arrangement until it formally transfers to the FWA in April 2027.
Can the Fair Work Agency name employers publicly? Yes. It can publicly name employers found to have breached employment rights, following the same approach as the existing minimum wage naming scheme.
Does the Fair Work Agency cover health and safety? No. Workplace health and safety remains with the Health and Safety Executive. The FWA's remit is pay, leave, agency worker rules and labour exploitation.
What's the most common compliance issue the Fair Work Agency is likely to find? Holiday pay calculation errors, particularly for staff with variable hours, are widely flagged as one of its top enforcement priorities.
Sources
The No Compromise Newsletter
Straight-talking hiring insight, once a month.
