As per the Employment Rights Act 2025, on April 7th, the government established the Fair Work Agency (FWA).
It’s been created to consolidate several bodies into one unified entity to ensure certain employee rights are enforced.
In 2026/27, the FWA will have a total budget of £60.1 million. Comparatively, the current combined cost of the bodies its replacing is £47.4 million—meaning it’ll have an additional £12.7 million to spend.
The FWA has a range of powers, which we’ll discuss later in this guide, but for immediate support, you can download our free FWA checklist.
For broader guidance, refer to our complete HR services, or alternatively, you can contact one our consultants today.
What is the Fair Work Agency?
It is a centralised body that combines the functions of the following:
- Employment Agency Standards Inspectorate
- Gangmasters and Labour Abuse Authority
- HMRC’s National Living and Minimum Wage teams
Its prime responsibility is to act as a single point of contact for workers and enforce their entitlements.
What will the Fair Work Agency cover?
Employee rights have been overhauled by the Employment Rights Act 2025, and the FWA has been tasked with making sure some of them are upheld. Here’s an overview of the aspects it’ll deal with:
- National Minimum Wage
- Statutory Sick Pay (SSP)
- Modern slavery offences
- Agency worker protections
- Gangmaster licensing
- Holiday pay
National Minimum Wage
Business owners should be aware that on April 1st, National Minimum Wage rates were changed:
- Age 21 and over (National Living Wage): Now £12.71 per hour (4.1% increase)
- Age 18-20: £10.85 per hour (8.5% increase)
- Age 16-17: £8.00 per hour (6.0% increase)
- Apprentice rate: £8.00 per hour (6.0% increase)
Whilst the FWA won’t be responsible for National Minimum Wage enforcement until 2027 (this will be HMRC’s remit), employers must meet their legal obligations to pay the National Minimum Wage.
Statutory Sick Pay (SSP)
Statutory Sick Pay (SSP) has also undergone significant reform following April’s Employment Rights Act 2025 changes. However, it won’t be until next year when the FWA can begin SSP enforcement.
With that said, whilst this enforcement, along with others, won’t be under their remit until 2027, the FWA can backdate until the date of Royal Assent (December 18th, 2025).
In addition to the flat rate being increased from £118.75 to £123.25, both the three-day waiting period and Lower Earnings Limit have been removed.
This means that SSP is now payable to all workers from the first full day of absence. Get an expert overview of the changes with our free guide to statutory sick pay changes.
Modern slavery offences
Supporting workers and employers, the FWA’s role will be to simplify a fractured enforcement system.
When it comes to modern slavery, the aim is to strengthen the UK’s response to exploitative practices within businesses. It’ll do so by:
- Integrating enforcement functions
- Improving intelligence systems
- Collaborating with stakeholders
Agency worker protections
Eventually, the FWA will be responsible for ensuring employers are compliant with regulations pertaining to agency workers.
To achieve this, they’ll investigate alleged breaches of agency worker rights and take action if the circumstances permit—this could be by requiring employers to illustrate compliance with employment law.
Gangmaster licensing
After absorbing the Gangmasters and Labour Abuse Authority (GLAA) licensing and enforcement functions, the FWA is responsible for regulating labour providers in:
- Agriculture
- Horticulture
- Shellfish gathering
Existing enforcement powers regarding gangmasters are active now, whilst others are yet to be introduced.
Holiday pay
Presently, holiday pay enforcement isn’t within the FWA’s remit. However, once it transitions to them, it will have the authority to:
- Investigate underpayment issues
- Require corrections
- Impose penalties
Also, since April 6th, employers must now keep records on holiday pay for six years. It’ll cover details like annual leave taken, certain pay aspects, and payments in lieu of unused leave.
Failure to have the sufficient records risks unlimited fines as it’s a criminal offence. If it’s established underpayment has occurred, then it’s a penalty of 200% of the underpayment—capped at £20,000 per individual.
What powers does the Fair Work Agency have?
If, for example, businesses fail with their legal obligations to pay National Minimum Wage, SSP, or another area of law they’re concerned with; the FWA has a range of powers at their disposal.
Statutory payment enforcement
As mentioned above, employers who do not adhere to laws concerning statutory payments may face punishment from the FWA—though it is yet to have this authority.
Notice of Underpayment that employers have to pay within 28 days could be issued. As previously mentioned, said notices will impose a 200% penalty of the sum, this is capped at £20,000 per individual.
Investigatory powers
Irrespective of an employee complaint, the FWA has the authority to assess possible breaches.
Enforcement officers can enter workplaces unannounced to gather evidence and assess the validity of documentation. They may also seize electronic devices.
Tribunal claims
Potentially next year, the FWA will have the power to bring employment tribunals on behalf of a worker.
They’ll also be able to offer legal advice and assistance to someone who is, or possibly is, involved in a civil legal case concerning employment or trade union law.
Cost recovery
When action is taken against employers who have been found to be non-compliant, the FWA can impose charges to recover said enforcement costs.
FAQs: Who is the Fair Work Agency (FWA)?
Who leads the FWA?
The FWA is chaired by Matthew Taylor, and the CEO is Lisa Pinney.
Can the FWA enter employers’ business without notice?
Enforcement officers have the power to enter premises unannounced and may do so to seize and gather evidence.
Could the FWA ‘name and shame’ companies?
The FWA may publicly list organisations that do not pay National Minimum Wage, which can often have dire reputational consequences.
How much are the fines for underpayment?
Should the FWA issue a Notice of Underpayment, the mandatory penalty is 200% of the total arrears and is capped at £20,000 per worker.
Can employers be charged for investigations?
The FWA has the power to recover enforcement costs. Effectively, this is the charge for the time and resources spent investigating non-compliance.
Final say: Who is the Fair Work Agency (FWA)?
Launched on April 7th, the FWA is a single body that will aim to enforce certain employee rights. As well as supporting employees, it provides guidance for businesses who wish to be compliant—and punish those who aren’t.
Employers should be proactive with their compliance; else they could face one of the many powers that the FWA can implement.
Get expert advice on the Fair Work Agency with Peninsula
With the FWA actively seeking to enforce certain employee rights, it’s imperative business owners are legally compliant—especially given they can enter work premises without warning.
If you’re an employer who’s unsure if they’d satisfy an investigation conducted by the FWA, our free FWA checklist has been drafted to support you.
Beyond changes from the Employment Rights Act 2025, Peninsula has a wealth of experience covering all aspects of employment law and HR.
When you partner with us, you’ll get access to:
Should you have any questions, feel free to contact us.
