The Fair Work Agency (FWA): what UK employers need to know (and do) in 2026

From April 2026, the way certain workplace rights are monitored and enforced in the UK has changed significantly. A new government body – the Fair Work Agency (FWA) – has been created under the Employment Rights Act 2025, bringing several enforcement functions together in one place.

For employers, the key point is this: the FWA makes enforcement more coordinated, and in many cases more proactive. This increases the importance of having the right documents, records, and processes in place so you can demonstrate compliance quickly if you are contacted or inspected.

Below we’ll explore what the FWA is, what it can do, and the practical steps businesses should take now to reduce the risk of enforcement. If you would like tailored advice for your organisation, we offer a complimentary initial consultation with one of our expert employment solicitors.

What is the Fair Work Agency?

The FWA is an Executive Agency of the Department for Business and Trade. Launched on the 7th April 2026, the FWA aims to make labour market enforcement simpler to navigate for both employers and workers, and more effective at addressing non-compliance.

At launch, it brought together enforcement work previously carried out by:

• HMRC’s National Minimum Wage / National Living Wage enforcement team
• The Employment Agency Standards Inspectorate (agency and employment business regulation)
• The Gangmasters and Labour Abuse Authority (labour exploitation and gangmasters licensing)

As the new regime beds in, the FWA is also expected to take on state enforcement of additional pay-related rights, including holiday pay and statutory sick pay compliance 

Key changes employers should be aware of

1. Regulatory consolidation

Instead of different regulators focusing on different issues, the FWA can now coordinate enforcement activity across multiple areas of workplace rights. In practice, that means an enquiry which starts with one issue (for example, agency worker arrangements) may now lead to wider requests for information about pay, leave, and working time records. 

This broader focus should help to ensure that issues do not fall between the purviews of different enforcement agencies, and that action can be taken more swiftly across a range of problems. The stated aim is also to support employers, improving guidance and reducing duplication to help them stay compliant.

2. Stronger enforcement powers

The FWA’s enforcement officers have wide powers, which can include the ability to:

• Carry out workplace inspections at any time
• Require employers to produce documents and records (e.g. contracts, policies, payslips, timesheets and rotas)
• Investigate historic issues (often up to six years, depending on the right being enforced)
• Issue notices requiring underpayments to be corrected within 28 days
• Impose civil penalties
• Bring Employment Tribunal claims on behalf of workers
  Publicly name non-compliant employers in serious cases.

3. Holiday pay and record-keeping

From the 6th April 2026, employers must keep adequate records of annual leave and holiday pay for at least six years. These records should clearly show holiday taken, holiday carried over, how holiday pay was calculated (including what pay elements were included), and any payments in lieu when employment ends, among any other relevant information.

4. Statutory Sick Pay enforcement

Statutory Sick Pay (SSP) has also changed. From the 6th April 2026:

• SSP is payable from day one of sickness absence, with the waiting days having been removed
• The Lower Earnings Limit has been removed, meaning that more people now qualify, as eligibility is no longer restricted by earnings.

What does this mean for business owners?

The FWA does not, by itself, impose a range of new day-to-day obligations on organisations. The intention behind the changes is to make enforcement more visible, better resourced, and more coordinated. In practice, that should mean:

• Greater likelihood of proactive investigations being undertaken into businesses
• Faster and more coordinated enforcement
• Increased importance of accurate pay, time-keeping, and leave records for staff
• Less tolerance for informal or inconsistent practices.

What the FWA represents is a move towards more consistent enforcement of existing laws around record keeping for organisations. This should not only help businesses meet their obligations around data protection and compliance, but also help to identify organisations that may be gaining an unfair competitive advantage by breaking the law.

What might the FWA ask for? 

Employers are often asked to produce records quickly. Common requests include payslips and payroll reports, timesheets/clock-in data, rotas, contracts and worker status information (including for casual, zero-hours and agency staff), holiday booking records and evidence of how holiday pay and SSP were calculated. GDPR also requires swift access to user data collected by businesses, further emphasising the need for efficient record keeping.

In practice, we’ve found that many enforcement issues arise not from deliberate underpayment, but from technical errors, inconsistent working practices, or systems that haven’t kept pace with legal changes (e.g. overtime not being reflected correctly in holiday pay, or SSP settings not being updated). These are common pressure points for SMEs, where HR and payroll processes are typically stretched.

Key takeaways for employers

The Fair Work Agency might be seen as the imposition of more red tape and regulations on employers, but it’s really the consolidation and honing of rules that already existed. What it does do is reemphasise the importance of good record keeping, ensuring that compliance is demonstrated in writing, rather than just being assumed. In summary:

• Compliance risk is usually manageable where pay, leave and SSP processes are correct and consistently applied
• You must be able to prove compliance with clear records, not just assume it is happening
• Holiday records and holiday pay calculations now need to be robust and retained for six years
• Written policies and contracts should match what happens in practice (especially for variable hours, overtime, and agency/casual arrangements)
• Historic issues can still be investigated, so it’s worth addressing known problem areas early.

How can businesses prepare and ensure compliance?

Practical steps businesses should consider now include:

• Review payroll processes, especially minimum wage compliance, deductions, salary sacrifice arrangements and variable pay
• Audit holiday entitlement and holiday pay calculations, particularly for overtime, commission, irregular hours and part-year workers
• Update SSP policies and payroll settings to reflect day-one SSP and the broader eligibility rules
• Make sure records are complete, accurate and retained for at least six years (leave, pay and working time)
• Review agency, casual and contractor arrangements to confirm worker status, documentation and day-to-day practices align
• Train managers to apply policies consistently (and to escalate issues early)
• Take early legal advice if practices have evolved informally or if you suspect historic underpayments or record gaps

A proactive review is often far easier – and less costly – than responding under time pressure to an inspection or formal information request. The FWA should be a wake-up call for employers to get ahead of any issues, and ensure that they can demonstrate compliance quickly if and when the time comes.

How we can help

Our employment law team regularly advises employers on:

• Employment law compliance reviews (including pay, holiday pay and SSP risk audits)
• Updating contracts, policies and manager guidance so day-to-day practice matches your documents
• Handling regulator enquiries, inspections and enforcement action (including strategy, responses and evidence collation)

Ready to take the next step? If you would like to understand how the Fair Work Agency may impact your business, or you would like us to review your holiday pay, SSP and record-keeping processes, please contact us to arrange a complimentary initial consultation with an employment solicitor.