What is the new Fair Work Agency?

The Employment Rights Bill (ERB) will introduce a new Fair Work Agency (FWA) from April 2026.  The FWA represents a major shift in how workplace rights are enforced in the UK, consolidating powers and increasing oversight in a way that will affect all employers.

Although some of the detail remains to be confirmed through secondary legislation, the broad direction of travel is clear: stronger enforcement, more scrutiny, and tougher consequences for non-compliance.

What will the Fair Work Agency do?

The FWA will bring together functions that are currently spread across multiple regulators.  In practice this means that holiday pay, sick pay, and minimum wage entitlements will all be directly overseen by the new body.  It will also have responsibility for family-related leave rights such as maternity and paternity leave, as well as whistleblowing protections and breaches relating to collective consultation and redundancy.

This will create, for the first time, a single enforcement body for many core employment rights.  Employees who may previously have had little realistic prospect of enforcing claims in the tribunal system will now be able to rely on the FWA to step in.

Powers and Sanctions

The FWA will be given significant enforcement powers.  It will be able to investigate complaints from workers directly, conduct inspections and audits, issue compliance notices, and levy financial penalties for breaches.

At present, many employment rights can only be enforced if an individual brings a tribunal claim, which can be daunting, slow and expensive.  The FWA changes that dynamic. Employers should expect a more proactive regulator that will not wait for claims to reach tribunal but instead is able to intervene directly.

What’s still Unclear?

There are still important areas where the Government has not yet provided clarity.  The precise penalty levels the FWA will be able to impose remain to be confirmed.  We also do not yet know how whistleblowing reports will be triaged and acted upon, or the full scope of the FWA’s investigatory powers, for example whether it will be able to carry out unannounced inspections or seize documents.

It is also unclear how the FWA will interact with the existing tribunal system.  At this stage, further consultation and guidance is expected before April 2026.

Preparing for Change

Employers should not wait for every detail to be published before taking steps to prepare.  Now is the time to review payroll and HR processes to ensure accuracy on holiday pay, sick pay, and minimum wage.  It is also important to audit leave entitlements, redundancy procedures and whistleblowing policies to ensure they are up to date and being applied consistently.  Training managers on the importance of compliance and accurate record keeping will help create a culture of accountability and employers may find it useful to maintain an internal compliance log to evidence good practice if investigated later.

Conclusion

The Fair Work Agency will be one of the most significant structural reforms in employment law enforcement for decades.  While its full powers are still being shaped, its introduction reflects a clear policy direction: tougher oversight, more proactive enforcement, and higher penalties for breaches.

Employers who act now to tighten compliance processes and train managers will be in a stronger position to avoid scrutiny and to demonstrate good practice once the FWA becomes operational in 2026.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.