Written by Kirsten McKenzie at Hunter Adams. This information is correct as of April 2026.
What employers need to know about the UK’s new workplace regulator
There’s a lot of noise around the Employment Rights Act 2025 right now, and rightly so. But one change that could have a very real impact on employers’ day-to-day is the arrival of the Fair Work Agency.
As of the 7th April 2026, the new Fair Work Agency sits within the Department for Business and Trade and begins to bring together several existing labour market enforcement functions into one place. The aim is to create a single, recognisable enforcement body for workers and employers, while giving the government stronger powers to investigate and act where employment laws are being broken.
For employers, this matters because the Fair Work Agency signals a shift from a system that often relied on individuals bringing tribunal claims to one in which the state plays a more active role in inspecting workplaces, requiring evidence, pursuing underpayments, and, in some cases, bringing proceedings on a worker’s behalf.
The Fair Work Agency has powers to inspect workplaces, require employers to produce documents and evidence, issue Notices of Underpayment, bring civil proceedings in the employment tribunal, and use labour market enforcement orders where serious non-compliance is found.
What is the Fair Work Agency and why is it being introduced?
The Fair Work Agency is the government’s new workplace enforcement body. It replaces the fragmented approach that previously sat across:
- HMRC’s National Minimum Wage Unit,
- The Employment Agency Standards Inspectorate,
- The Gangmasters and Labour Abuse Authority
- and the Director of Labour Market Enforcement.
According to the Department for Business and Trade, those functions are being brought together to end what the Labour government described as the “fragmented system of employment rights enforcement”.
The reason for the change is straightforward. The previous system has often been difficult for workers to navigate and inconsistent for employers trying to understand where responsibility sits. The government believes that one leadership team, one strategy, and one recognisable brand will improve efficiency, support compliant businesses, and take tougher action against rogue employers.
There is also a wider policy driver here.
- According to the Low Pay Commission, as of 19th December 2024, around 371,000 workers were underpaid the National Minimum Wage in April 2024.
- According to Resolution Foundation research published on 25 April 2023, 900,000 workers reported receiving no paid holiday despite that being a day-one entitlement.
Those are not edge-case numbers. They help explain why enforcement has become such a big part of the conversation under the Employment Rights Bill (now 2025 Act).
What powers will the Fair Work Agency have?
This is the bit employers need to really pay attention to.
The Fair Work Agency can:
- Inspect workplaces
- Require employers to hand over relevant documents and evidence
- Investigate compliance with employment law
- Issue Notices of Underpayment to employers when workers have been underpaid, requiring them to pay arrears and a penalty to the government.
The Agency can also bring civil proceedings in the employment tribunal on a worker’s behalf and offer legal advice and assistance in employment or trade union-related civil cases.
For more serious labour market offences, it can use Labour Market Enforcement Undertakings and Labour Market Enforcement Orders.
Breach of a Labour Market Enforcement Order can lead to fines or imprisonment. Regulations may also allow the Fair Work Agency to recover enforcement costs from employers where action has been taken for non-compliance.
So while the Fair Work Agency wants to support employers who are trying to comply, it also has real teeth. This is not just guidance from the government, it’s enforcement.
What will it enforce?
The Fair Work Agency will bring together enforcement activities on the national minimum wage, employment agency standards, gangmasters licensing, and certain labour exploitation issues.
The wider remit also includes minimum wage and statutory sick pay enforcement, the employment tribunal penalty scheme, labour exploitation and modern slavery, employment agencies rules, and state enforcement of holiday pay for the first time.
Holiday pay and statutory sick pay will fall within the Agency’s remit at a later stage, with scope for the Secretary of State to expand enforcement further over time.
That matters because many businesses are not failing due to dramatic misconduct. Instead, they are getting caught by everyday process weaknesses:
- Pay and holiday calculations
- Variable hours
- Deductions
- Agency worker arrangements
- Inconsistent record-keeping
- Outdated contracts
- Informal manager decisions with no paper trail.
Those are the kinds of issues that can create risk quickly as workplace inspections become more proactive. This is especially true for standalone HR managers and founders, who are often already stretched and trying to keep compliant with limited time and resources.
Get in touch with us for advice on the Fair Work Agency >> https://hunteradams.co.uk/contact/
What should employers do now?
The smartest response is preparation, rather than panic.
Start with your records.
Holiday Records: According to CIPD, employers must keep records of annual leave and holiday pay for up to six years from 6 April 2026. If your holiday records are inconsistent, split across systems, or rely too heavily on manual workarounds, that needs attention now.
Pay and holidays: Next, look at pay and holiday together, not in silos. If payroll, HR, and line managers all handle different parts of the process, gaps tend to arise during handover.
Check how statutory sick pay is handled, how holiday pay is calculated for variable-hours staff, how deductions are authorised, and whether agency worker arrangements are properly documented. The Fair Work Agency will require employers to produce relevant documents and evidence to demonstrate compliance with employment law. That means good intentions will not be enough on their own.
Train your managers: A surprising amount of compliance risk stems from informal decisions about hours, pay, absence, leave, or conduct.
If managers are not documenting decisions properly, your business may be left trying to defend a process with no reliable audit trail.
For many organisations, this is where our practical support makes the biggest difference. We offer employee relations support, HR outsourcing for ongoing compliance, or interim HR help. This helps you get the basics sorted quickly. We support businesses in all these areas, including complex ER, interim HR cover, and HR outsourcing. We also help people manage their risk during change, restructuring, and M&A.
What does this mean for HR leaders and business owners?
For HR leaders, the Fair Work Agency raises the bar on evidence, consistency and readiness.
It gives you a stronger case for tightening processes, updating policies and getting buy-in for manager training.
For founders and non-HR leaders, it is a reminder that employment law risk is not just legal risk. It is a commercial risk too. Underpayments, poor records, and inconsistent practices can drain time, erode trust, and cost far more to fix later. That is exactly why this matters to boards, finance leaders, referral partners, and HR teams.
It is also worth noting that not everyone is convinced the new Agency will be effective straight away.
According to an Institute of Employment Rights briefing published on 6 April 2026, some experts warned of risks.
They said the Fair Work Agency may struggle without stronger funding and inspection capacity.
This could make it harder to deliver meaningful protection in practice. That does not reduce the importance of getting ready. If anything, it shows that enforcement is changing. Details will keep evolving. Employers need to watch closely for what comes next.
The bottom line
The Fair Work Agency is one of the most important practical changes under the Employment Rights Act 2025. It brings employment law enforcement into sharper focus, gives the government stronger powers, and puts more pressure on employers to show their workings rather than just assume their processes are fine.
According to the Department for Business and Trade, implementation will happen in phases, starting with the establishment of the Agency in April 2026, with further details on timing still to come. Now is the time to get your house in order.
