Helping you prepare for the April 2026 launch of the Fair Work Agency
Helping you prepare for the April 2026 launch of the Fair Work Agency
On 1 July, the Government announced its comprehensive roadmap for its Employment Rights Bill which is aimed at raising the living standards across the UK. As part of its roadmap, the Government confirmed that the new Fair Work Agency (FWA) will go live from April 2026.
What is the Fair Work Agency?
Most employment rights are enforced by individuals presenting a complaint to an Employment Tribunal or in limited cases enforced by the state on workers’ behalf – such as the National Minimum Wage. Acceptance that the current system of state enforcement is fragmented and inefficient, the Government's new FWA will bring together existing state enforcement functions under one single body.
The Government believe this will improve efficiency by ensuring there is one leadership team to oversee work in line with a unified strategy. The FWA will aim to resolve issues upstream by supporting employers that want to comply with the law. But it will also have strong powers to investigate and take action against employers that flout the law.
How will the FWA operate?
The FWA will be an Executive Agency of the Department for Business and Trade (DBT) who will possess a range of enforcement powers, including powers to require employers to provide information, enter premises to get documents, and in some cases require employers to provide undertakings – backed up by criminal offences. The FWAs remit will cover:
- National Minimum Wage (NMW) – NMW entitlement, record-keeping and enforcement of arrears.
- Holiday pay – right to payment for holiday, including rolled-up holiday pay for irregular hours and part-year workers arrangements.
- Holiday pay – an obligation to keep records demonstrating compliance with holiday entitlement (leave and pay) for six years, failure to comply being a criminal offence punishable by fines.
- A new obligation to demonstrate statutory sick pay compliance, failure to comply being a criminal offence punishable by fines
- Modern slavery offences
- Rules on employment agencies and employment businesses
- Gangmasters licencing
Many of these areas were already covered by existing enforcement agencies. However, new powers to issue notices of underpayment with a financial penalty, require information or documents and enter premises will be especially significant for employment rights that were not previously covered by enforcement bodies, e.g. holiday and sick pay.
How should the care sector plan for the FWA?
Many Care providers will already be complying with these statutory employee rights. However, changes in legislation, Government guidance and HMRC application often make it difficult for employers to keep on top of these regulations. We expect the FWA to target sectors and markets in which pay is often set at or near the NMW where variable hours working are most common, such as the care sector.
BDO's tax experts can help you understand and assess your compliance in these statutory areas and given their experience in the sector, best placed to advise on how to manage your risks. If you want to speak to a member of the BDO team, please contact Laurence Simms on Laurence.simms@bdo.co.uk.