The Fair Work Agency: what it does and why it matters

The Fair Work Agency (FWA) launched on 6 April 2026, consolidating enforcement functions previously held by HMRC's NMW Enforcement, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority. It is the single largest restructuring of UK labour enforcement in over a generation.

What the Fair Work Agency enforces

• Holiday pay entitlements — this is new ground for state enforcement. Previously holiday pay was enforced only via tribunal claim. The FWA can now investigate and act directly.
• National Minimum Wage and National Living Wage — record-keeping and underpayment.
• Statutory Sick Pay — under the new April 2026 rules.
• Employment agency standards — including the regulation of umbrella companies.
• Labour exploitation and modern slavery in employment.

Powers the FWA has

• Expanded civil penalty regime. Penalties of up to 200% of underpayment for NMW breaches remain, with public naming for non-compliance.
• Power to bring tribunal claims on behalf of workers. Workers no longer have to fund their own case to enforce some rights.
• Power to regulate umbrella companies — a long-standing gap in UK labour enforcement.
• Investigative powers including the ability to enter workplaces, demand records, and interview staff.

What this means for employers

• Holiday pay compliance is now genuinely high-risk. Getting holiday pay calculation wrong (especially for variable-hours and zero-hours staff) is one of the most common payroll errors. The FWA can now investigate proactively.
• NMW record-keeping remains critical. Employers must keep records sufficient to demonstrate NMW compliance for at least three years (six years is safer).
• Umbrella company arrangements face increased scrutiny. If you use umbrella companies as part of a contractor supply chain, you should audit them.

What to do now

• Audit holiday pay calculation methods — particularly for variable-hours staff (where the rolling 52-week reference period applies).
• Review NMW records and ensure they cover every worker, including apprentices and salaried staff whose hourly equivalent might fall below the threshold.
• Map any umbrella company relationships and confirm compliance.

Official source: GOV.UK — Fair Work Agency.