What is the Fair Work Agency and how will it impact my business?

The Fair Work Agency (FWA) is a new UK government body, launched in April 2026. The agency has responsibility for helping to enforce workers’ rights and improve compliance with UK employment laws. The FWA will have a similar enforcement role to the HSE in that it helps ensure businesses comply with legal requirements, but it focuses on workers’ rights and employment law rather than health and safety.

Why was the Fair Work Agency created?

Unfortunately, many UK workers experience problems with HR issues at work, despite there being legislation in place to protect them. As an example, not all employees are paid the National Minimum Wage, even though this is the law. Often, this is an oversight on the part of companies rather than deliberate avoidance. One common issue is when employees work additional unpaid hours, meaning their effective hourly rate falls below the National Minimum Wage.

The Fair Work Agency will enforce employment rights such as the National Minimum Wage and holiday pay protections.

What is the role of the Fair Work Agency in the UK and how does it affect me as an employer?

As the agency is newly established, its full role is likely to evolve over time. However, employers should be aware of the areas it may oversee, even if primary responsibility currently rests with another government body:

• Rates of pay and hours worked – to make sure hours worked are in line with the National Minimum Wage.

• Holiday pay& leave – to ensure that workers receive holiday pay and receive their legal entitlement. It’s worth noting that, by law, workers on a full-time contract of 5 days a week are entitled to 5.6 weeks of leave per year.

• Sick pay – regulations around Statutory Sick Pay (SSP) have recently changed, including the removal of the 3-day waiting period. Employers will need to ensure they have complete SSP records and that payments are correctly applied from day one of sickness.

• Pension and auto-enrolment records – you need to have a pension scheme in place and manage auto-enrolment in line with expected government contributions.

Find out more about pension auto-enrolment and contributions in our short guide: Do I need to offer a company pension plan?

• Right to work checks – rules have recently changed on who checks apply to, and fines are £60,000 per illegal worker. Although overseen by the Home Office and Immigration Enforcement, this is a particularly critical employment area and an essential part of your compliance checks.

A spotlight on right to work – what you need to know as a business

Given the scale of penalties linked to right to work checks, it’s worth noting a few things that will apply from October 2026:

• Right to work checks will no longer just apply to traditional employees. They will also apply to agency workers, casual workers and contractors who provide personal services. Anyone you employ or engage directly where checks are required must have the right to work in the UK.

• Your contracts and onboarding processes should clearly set out your expectations around right to work checks and compliance responsibilities with your service providers.

• The government takes this seriously. In 2025, over £130 million in fines were issued and some of the reasons employees were fined included:

o   Using cash in hand illegal workers,

o   Employees working illegally as checks had not been carried out,

o   Fake passports being used for right to work checks and employers not noticing,

o   Expired work permits or visas that had no renewal check.

We’re confident the Fair Work Agency will focus on right to work checks for freelancers once this law comes into force.

We make sure we include this liability on us if you engage our services, so you have assurance that anyone working with us has the legal right to work in the UK.

What do I need to do as an employer?

Complying with UK employment legislation is not a one-time action. This is one of the reasons the Fair Work Agency has been set up – to ensure that companies comply, and to help them get things right. The best way to ensure you will always satisfy employment and HR requirements is to review your policies, check your record keeping and ensure you align with what your policy says – it’s there for a reason – and hopefully you had a professional write it.

Here are five important checks to complete:

1.     Ensure all your contracts are tight. This includes direct employment, agency, contractor and freelancer agreements.

2.     Keep clear holiday pay and sick pay records.

3.     Complete all right to work checks fully and properly and ensure those checks are embedded for all new workers, regardless of contract type.

4.     Have a pension scheme in place and ensure all staff are auto-enrolled.

5.     Make sure you understand how National Minimum Wage is calculated and that all staff are being paid accordingly. If you employ people on or near that rate who do unpaid overtime, even if they get time off in lieu, check your calculations, because you might get caught out.

What are the risks for UK businesses right now?

UK businesses have been hit hard by rising National Insurance contributions, minimum wage increases, high utility prices and general cost increases when running a business. Unfortunately, this means many companies have unintentionally put themselves at risk. Low-cost online templates, using generic call centre-type HR support services, and using freelancers and casual staff via online platforms may mean your business is no longer compliant. It’s also worth noting that AI is not an effective substitute for professional legal or HR advice when creating employment contracts or policies! Believe me – I’ve tested it extensively!

What to do if you need help around employment and HR

If you have concerns about compliance, we can help. We can work with you in person or online in Oxfordshire, Berkshire, Buckinghamshire, and UK-wide, answering your questions and helping you to get your employment documentation in order. Contact us today for HR support you can rely on.

Disclaimer: This article provides general information and guidance only and does not replace tailored HR advice for your business. Please contact us to discuss your specific circumstances.