A major shift in worker rights enforcement in the UK is set to take place from 7 April 2026. The launch of the Fair Work Agency (FWA) will impact how employers show compliance around pay and wider statutory rights.

The FWA changes how a lot of companies pay their staff – including both permanent employees and contractors. But the government is also giving the FWA new powers to enforce rules in areas that weren't strictly monitored before. Employers need to pay closer attention to how they handle pay and other statutory rights.

This article summarises what the FWA is, why it matters and how businesses can prepare.

What is the Fair Work Agency?

As a new single enforcement body for workplace rights, the FWA brings together enforcement of national minimum wage (NMW), holiday pay, agency worker protections, gangmaster licensing, centralising oversight of payroll accuracy, working time records and certain statutory payments.

The FWA consolidates:

• HMRC’s NMW enforcement team.
• The Employment Agency Standards Inspectorate.
• The Gangmasters and Labour Abuse Authority.

The result is a move from a multi agency approach to enforcement to a single regulator with wider powers and a broader remit. The FWA will also have remit over any new compliance regimes that come into place in the future.

What are the key FWA changes from April 2026

While the FWA itself does not create any new legal obligations for businesses, it does launch a new team of over 550 inspectors. These inspectors will have a much broader remit when it comes to upholding employment standards.

Faster, stronger enforcement

The new agency will be able to investigate and request information and evidence from employers. Importantly, it can also issue civil penalties, require repayment of underpaid statutory entitlements or pay and act against labour exploitation.

Widened investigatory powers

The FWA will have the power to conduct inspections, demand access to records and interview workers. New penalties can be applied to matters which previously did not attract penalties such as underpayment of holiday pay. Reputationally, there is also the risk that these underpayments are made public similar to the current NMW naming regime.

More proactive oversight

It is expected that the agency’s focus will be on whether employers can prove compliance quickly, clearly and consistently in areas like payroll accuracy, working time records and holiday pay calculations.

Reviews will be opened if there are worker complaints, but the FWA will also be proactively reviewing businesses based on their location, industry and size.

Which employers are most impacted

The FWA applies across all sectors and business sizes, but some employers face higher exposure:

• Organisations using variable hours, shift patterns or irregular work.
• Employers relying on agency workers or outsourced labour.
• Businesses operating separate HR and payroll systems.
• Any organisation where policies and practices differ across departments or sites.

These businesses are likely to come under increased scrutiny due to the higher likelihood of discrepancies between records and real working practices.

It is important to understand that enforcement is not limited to persistent non-compliers. Many investigations could start because records are incomplete or inconsistent, rather than suspected deliberate breaches.

Why the Fair Work Agency matters to employment tax

Although the FWA is not a tax body, its remit overlaps with employment tax compliance because:

• Payroll accuracy is central to both PAYE/NIC and NMW, holiday pay and other statutory pay compliance.
• Holiday pay and statutory sick pay (SSP) calculations often rely on payroll data and create tax related liabilities if incorrect.
• Record keeping expectations will increase, and HMRC often relies on the same data for tax enquiries.

The FWA’s scrutiny of real world working practices mirrors the operational accuracy needed for compliant payroll and off payroll processes. For many businesses, the FWA will be an additional, more proactive check on the payroll related risks that employment tax teams already advise on.

What businesses should do now

Tighten payroll accuracy and record keeping

The FWA emphasises accurate working time, holiday pay and statutory payment records. These also happen to be areas where misalignment with payroll systems is common.

Check calculation accuracy

You should ensure that holiday pay, SSP, NMW and other statutory calculations are correct and applied consistently. The FWA will expect clear evidence that calculations are accurate and replicable.

Map contingent labour supply chains

If you use agency workers or outsourced labour, you will need consistent, well documented processes. These are specific focus areas for the FWA. When reviewing labour supply chains, you need to confirm which organisation is responsible for each worker right, as liability may sit with the end user rather than the agency.

Ensure HR and payroll systems align

Many enforcement actions arise where HR stated practices do not match payroll recorded data (e.g. unpaid training time, handovers, travel time). Aligning systems and ensuring process and controls are robust is key to reducing risk.

Strengthen internal controls before April 2026

The FWA is designed to investigate quickly and will expect evidence on demand. It will be the employer’s obligation to prove compliance as opposed to the agency or worker. Reviewing your policies, documentation and workforce compliance processes before 7 April is essential.

Educate managers and operational teams

The greatest risk often arises at line manager level where real world scheduling, deductions or working time rules may diverge from policy.

Next steps for employers

The FWA marks the most significant restructuring of workplace targeted enforcement in over a decade. By consolidating multiple regulators into a single body with wider powers, the government is signalling a more rigorous, data driven approach to compliance.

For employers (especially those with variable hours, agency workers or complex payroll arrangements) the message is clear. Compliance must be well documented, accurate and easily evidenced by April 2026. To discuss how the FWA will impact your organisation and the steps you should take now, please get in touch with Chris Robson or your usual RSM contact.

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