Fair Work Agency – Are your ducks in a row?

So, what is the Fair Work Agency?
The Fair Work Agency (FWA) is a new government body that launched on 7 April 2026 as part of the government’s wider ‘Make Work Pay’ agenda which has been introduced through the Employment Rights Act 2025. Its aim is to tackle workplace exploitation and raise standards across UK businesses.  It brings the enforcement of key employment rights into one place.

Before the Fair Work Agency, employment law enforcement was split across three separate bodies, each with its own remit, its own processes and its own limitations; they all operated independently and therefore it was easy for issues in other areas to fall below the radar.

The Fair Work Agency brings all three into a new single enforcement body, creating one central point for enforcement; with a wider remit, more coordinated powers and a sharper focus on everyday employment basics. In short, it’s harder to slip through the cracks.

But it isn’t just there to catch businesses out, it’s about creating a level playing field. Employers that already do the right thing shouldn’t be undercut by those that don’t.  The Fair Work Agency is there to support employers who want to be compliant too.

The areas it’ll focus on include:

• Whether workers are being paid at or above the National Minimum or Living Wage
• Whether employees are receiving the correct holiday pay, sick pay and other statutory entitlements
• Whether workers are receiving fair treatment and aren’t being exploited
• Whether employers are keeping accurate, up-to-date records, including payslips, contracts and right-to-work paperwork (did you know you had to keep employee records for six years?) – this is the areas where lots of companies will fall short.
• Whether businesses using agency workers, umbrella companies or labour providers have the right agreements in place

This list is expected to grow over time as the Fair Work Agency takes on a wider range of enforcement responsibilities.

What powers does the Fair Work Agency have?
The Fair Work Agency has strong powers that are broader and more joined-up than any of its predecessor bodies. Here’s what that looks like in practice:

Inspecting workplaces at any time
FWA enforcement officers can enter business premises, conduct inspections and investigate complaints without needing a report or complaint from an employee to trigger it.  Penalties for obstructing an investigation or providing false information can include unlimited fines and up to 51 weeks in prison.  Eek!

Requesting documentation and evidence
To assess compliance, the Fair Work Agency can ask employers to provide evidence at any time. That might include things like employment contract for all employees, payslips, records of hours worked, pay rise letters, holiday and sick leave records, company policies – basically anything relating to employment of your employees.

Again, providing false documents or misleading information can lead to unlimited fines and up to 51 weeks in prison.

Fining employers who’ve underpaid their workers 
Fair Work Agency enforcement officers can issue Notices of Underpayment, which require employers to repay arrears to workers within 28 days. They can recover unpaid wages, Statutory Sick Pay, holiday pay and more, going back up to six years.

The fine includes the arrears, plus a mandatory penalty of 200% of the total underpayment, capped at £20,000 per worker. If you pay both the arrears and the penalty within 14 days, the penalty drops to 100%.

Publicly naming non-compliant businesses
Sometimes, the Fair Work Agency will also publicly name and shame non-compliant employers (within a year of their case closing). While this won’t happen to every business, it’s an additional reputational risk worth being aware of.

Taking cases to employment tribunal on behalf of a worker
The Fair Work Agency can bring civil proceedings to an employment tribunal on behalf of an employee, reducing the burden on the individual. It can also offer legal assistance to employees in civil employment law cases.

Legally enforcing a change in behaviour
Fair Work Agency officers can issue Labour Market Enforcement Undertakings and Labour Market Enforcement Orders to compel businesses to change practices that don’t comply with the law.

Recovering enforcement costs from businesses
The Fair Work Agency can charge its own enforcement costs back to employers who are found to be breaking the law. These are separate from any arrears or financial penalties.

The government hasn’t published exact figures yet, but they may follow a similar model to the Health and Safety Executive. Based on that, costs could look something like:

• Up to £1,000 for a simple breach (a standard letter or notice)
• Up to £2,000 for a standard investigation taking a day or two to resolve
• Over £20,000 for serious or long-running breaches that take weeks to resolve

This is based on an estimated rate of £150-£200 per hour for an inspector’s time. But, these are indicative figures only, not confirmed rates.

Why this matters – especially for small-to-medium sized businesses
Most compliance problems don’t come from big, obvious mistakes. They come from the small, everyday stuff: holiday calculations that vary depending on who’s doing them, employment contracts that haven’t been updated in years, or HR records spread across email threads and spreadsheets.

That’s where the real risk tends to sit. And it’s also where things get harder to unpick quickly if an inspector, an employee, or a tribunal asks you to show your working.

For small and medium-sized businesses, this matters more than it might for larger organisations. You’re less likely to have a dedicated legal or compliance team checking everything, and HR responsibilities often sit with whoever has capacity, whether that’s a founder or an office manager who doesn’t have employment law or HR knowledge and experience.  That’s not a criticism – it’s just the reality of running a growing business. But it does mean the everyday admin gaps that the Fair Work Agency are looking at are more common, and often harder to spot.

So, what do you need to do?
Get organised!  The Fair Work Agency hasn’t changed the rules. But it has put a brighter spotlight on whether employment rights basics are in place and easy to evidence. For most businesses, that’s less about learning new legislation and more about getting organised.

Ask yourself, if someone from the Fair Work Agency knocks on your door tomorrow, could you show them your holiday records from the last six years?  Could you prove everyone’s on the right pay rate?  Could you pull up an employment contract for every member of your team?

It may sound a bit scary, but Acorns and Oaks is here to help if you need it.  If you feel that you need help organising your ducks (no judgement), please do get in touch, so we can help.