What Is The Fair Work Agency?

The Employment Rights Bill is set to establish a new state enforcement agency, the Fair Work Agency (FWA). The proposed single enforcement body (sometimes referred to as the Fair Work Act) will have the power to search, arrest, and conduct interviews with suspects in relation to labour market offences or underpayment of holiday pay dating back six years from the date the Bill is passed.

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How will the Fair Work Agency change how rights are enforced?

This will considerably impact employment law. Currently, a limited number of rights are enforced by the state on behalf of workers. The Fair Work Agency will change this and will centralise the enforcement of a wide range of employment rights, including the minimum wage, holiday pay, and Statutory Sick Pay (SSP).

Crucially, it will require businesses to keep records, willingly share documentation, or face criminal charges or penalties.

With the right to enter business premises (even home offices) and the ability to escalate to unlimited fines and up to 51 weeks in prison, we’ll explore what the FWA means for your business and how to prepare for the proposed changes.

Role and responsibilities of the fair work agency fwa 1

What’s the role and responsibilities of the Fair Work Agency (FWA)?

So, what will the Fair Work Agency cover? The role of the FWA is proposed as an ‘executive agency’ within the Department for Business and Trade, which will consolidate and centralise HMRC’s National Minimum Wage enforcement, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority (GLAA).

While it comprises many agencies into a single body, the move is far more than an office reshuffle.

The aim of The Fair Work Agency is to become a regulator that’s responsible for taking proactive measures in upholding employment law with real powers.

900,000

UK workers have their holiday pay withheld every year, and 14% of the lowest-paid workers report receiving no paid holiday. (Resolution Foundation)

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The agency will enforce workers’ rights in Statutory Sick Pay (SSP) and holiday pay, areas where underpayments often go unchallenged. According to The Resolution Foundation, 900,000 UK workers have their holiday pay withheld every year, and 14% of the lowest-paid workers report receiving no paid holiday.

While other countries have similar approaches, the fair work UK approach is designed to give fair agency to employees and a firm hand to negligent employers who flout the rules.

Structurally, the FWA is a department for business and trade that is integrated into and reports to the Secretary of State as a worker rights agency.

It won’t have its own legal identity, but it will be designed as a social partnership model. This means that the FWA will be established as an advisory board with seats for businesses, trade unions, and experts, in order to foster common ground and collaboration on the practicalities of enforcement.

It is expected that over time, the Fair Work Agency will expand its scope to cover more employment rights, potentially being one single place for workers and employers for any employment issues, rather than multiple agencies working in siloes.

While its effectiveness is as yet unknown, the broad powers the agency has been granted, as well as the fact that it will have funding through Notice of Underpayment penalties, means it’s likely that the Fair Work Agency will have the means to investigate and pursue businesses.

The Fair Work Agency will be set to cover:

  • Enforcement of the National Minimum Wage
  • The unpaid employment tribunal award penalty scheme
  • Regulations for employment agencies and employment businesses
  • Statutory sick pay (SSP)
  • Statutory holiday pay
  • The licensing regime for businesses operating as ‘gangmasters’ in certain sectors
  • Enforcement of parts 1 and 2 of the Modern Slavery Act 2015

While sometimes referred to as the Fair Employment Agency or the Fair Work Agency Employment Rights Bill, this is not just for those in recruitment or even HR to be concerned with.

In fact, the new criminal charges apply to company directors, so it’s critical that everyone has an understanding of what will be required.

First, the FWA will be able to investigate an employer and issue a notice of underpayment if it discovers that workers have been underpaid for a period of six years preceding the bill’s passage.

They will then state the amount due to each individual in a ‘Notice of Underpayment’, which must be paid within 28 days.

In addition to requiring payment to workers, the notice will also impose a penalty payable to the Secretary of State. This penalty is set at 200% of the sum due to the workers (capped at £20,000 per individual). If both the sums owed to workers and the penalty are paid within 14 days, the penalty amount will be reduced to 100% of the sum due.

The Fair Work Agency can also bring employment tribunal claims on behalf of workers, and crucially, these do not have to be limited to the employment rights it will enforce. That means FWA could bring an unfair dismissal or discrimination claim against an employer on behalf of an employee.

Finally, the FWA can recover enforcement costs from non-compliant employers.

This may sound heavy-handed for businesses that just want to comply and get things right. However, it’s important to remember that the Low Pay Commission estimates that in 2024, 19.4% of workers paid at or near the wage floor were underpaid.

The fair work agency is designed to root out the worst offenders in the area of employment rights, ensuring that they are strongly deterred from unethical behaviour.

While the Employee Rights Bill is set to be approved in Autumn 2025, April 2026 is the proposed date for the establishment of the FWA.

According to the government’s Implementing the Employee Rights Bill roadmap, published on 1 July 2025, the FWA requires primary legislation…(and)…The Employment Rights Bill is just the first phase of that and lays the foundation for the creation of the FWA. Implementation will be done in phases following Royal Assent.

If this date were to move, the timelines would shift.

What powers will The Fair Work Agency have?

  • Enforcing penalties for unpaid statutory payments
  • Recovering arrears dating back up to six years
  • Issuing notices to compel information and documents
  • Criminal penalties for failing to comply or falsifying records
  • Right to compel employer interviews
  • Access to business premises, including home offices
  • Inspection and seizure of physical and digital records
  • Labour Market Enforcement Undertakings and Orders
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To summarise, the powers of the FWA include the ability to search, arrest, and conduct suspect interviews in relation to labour market offences.

The Fair Work Agency can issue a notice to employers to pay arrears to workers within 28 days, covering a retrospective period of up to 6 years. The notice will also include penalties – 200% of the amount owed to the Secretary of State (dropping to 100% if paid within 28 days).

The Fair Work Agency will have powers to acquire information or documents, and failure to comply will be a criminal offence. Similarly, falsifying information knowingly will be an offence.

The Fair Work Agency will have the right tocompel employers to attend an interview and enter business premises (including home offices) to inspect computers or seize relevant documents.

The FWA can seek Labour Market Enforcement Undertakings (LMEUs), which are legally binding promises from employers to comply. If these are ignored, the FWA can apply to the courts for an LME Order.

It will be a criminal offence to knowingly give false information or intentionally mislead an enforcement officer, with penalties including unlimited fines and up to 51 weeks in prison.

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How could the Fair Work Agency proposal impact your Business?

  • It will become a legal duty to keep evidence of leave compliance for 6 years
  • The Fair Work Agency can bring employment tribunal claims on behalf of workers
  • Recklessly producing false documents or obstruction of an officer can lead to criminal charges

Launching a tribunal on behalf of a worker
The Fair Work Agency can bring employment tribunal claims on behalf of workers without being limited to the employment rights it will enforce. This means all areas of employment law have to be top of mind, as any employee could be represented without needing to bring a tribunal themselves.

Requesting six years of leave documentation
It will become a legal duty to keep evidence of leave compliance for six years.

Entering your business
If an officer is obstructed from accessing files and documentation, this could leave you open to serious consequences.

Criminal offences
By recklessly producing false documents and information, it’s possible to gain a criminal record, and company directors, managers, and officers can be personally liable.

When will the new Fair Work Agency come into power?

As the Fair Work Agency and Employment Rights Bill are connected, the new Fair Work Agency will only come into power around April 2026, following the Employment Rights Bill being approved in parliament.

Avensure help you prepare for the fair work agency fwa

How can Avensure help you prepare for the Fair Work Agency (FWA)?

HR outsourcing services you use must be beyond reproach, ensuring that, as the legislation passes, you are assured of your compliance in all areas of employment law.

We help over 7,000 businesses across the UK maintain a compliant and healthy workforce, we can help you too

We can help businesses prepare for the launch of the Fair Work Agency by helping with both your questions and the structure of your business information.

Holiday pay calculations are notoriously confusing, and you need the confidence that you have been correctly allocating leave.

You may also want to consider auto-enrollment and SSP. Are you 100% certain that everything from the past six years will be accurate enough for scrutiny? You may have unknowingly underpaid an employee, and now is the time to take corrective action.

We offer a 24-hour HR advice line for employers as well as employer tribunal representation. Our small business HR services are invaluable for teams without the bandwidth to tackle everything themselves.

An Avensure HR expert can help you. Get in touch today and discuss the impact of the FWA well ahead of time.

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Please Note: The Fair Work Agency (FWA) is a new UK state enforcement body created under the Employment Rights Bill. Once the Bill receives Royal Assent, the FWA’s full enforcement powers and operational status are scheduled to commence from April 2026.

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