The Fair Work Agency: What Small Businesses Need to Know for April 2026
- Robinson Grace HR
- Mar 26
- 4 min read
Launching on 7 April 2026, the new Fair Work Agency will consolidate enforcement of employee rights including National Minimum Wage and agency worker protections. Over time, the Fair Work Agency will take on enforcement of additional rights such as holiday pay. The agency will have powers to investigate breaches, issues civil penalties and take action against labour exploitation.
If you are an employer in the UK, this blog explains what this means for you and what you should be doing to prepare.
What is the Fair Work Agency?
Created under the Employment Rights Act 2025, this is a new government body that will combine three existing enforcement organisations:
HMRC’s National Minimum Wage enforcement team
The Employment Agency Standards Inspectorate
The Gangmasters and Labour Abuse Authority
For UK employers, this marks a significant shift towards proactive enforcement of employment law. Unlike previous systems where investigations were typically triggered by employee complaints, the Fair Work Agency can now initiate investigations without prior notice. This increases the importance of maintaining accurate payroll records, ensuring correct wage calculations, and staying compliant with evolving UK employment law requirements.
Enforcements under the Fair Work Agency
From 7 April 2026, the Fair Work Agency will take over enforcement of National Minimum Wage from HMRC. It will then develop to enforce:
National Minimum Wage compliance
National Living Wage compliance
Holiday Pay compliance
Employment agency regulations
Labour exploitation and modern slavery
Unpaid employment tribunal awards
What impact could this have on employers
The Fair Work Agency will have the powers to enter business premises to gather evidence to ensure compliance. They can investigate historical breaches up to six years prior, issue penalties up to 200% of underpayments, bring employment tribunal claims on behalf of workers and publicly name non-compliant employers.
Things to think about
Even if you think you’re compliant, it is still important for all employers to consider whether operations could be in breach. Many aren’t deliberate, they can simply be mistakes or technical errors made without even realising, so these are some of the steps you can take to avoid any problems:
Conducting a minimum wage audit to ensure all employees are paid correctly in every pay period
Reviewing deductions, including salary sacrifice schemes, to confirm they do not reduce pay below legal thresholds
Ensuring all working time, including training and travel, is properly recorded and reimbursed
Reviewing holiday pay calculations to include overtime and commission where applicable
Keeping detailed and accurate employment records to demonstrate compliance
What to do next
To make sure you’re not risking an accidental breach, now is the time to make sure mistakes aren’t already happening:
Audit pay: make sure employees are receiving minimum wage every pay period
Audit deductions: make sure they’re not reducing anyone’s hourly rate below the minimum wage
Check working time records: make sure all hours employees are spending at work are being captured and reimbursed
Check holiday calculations and pay: holiday calculations should include regular overtime worked and pay should reflect normal earnings including commission, not just basic pay
Document everything: keeping good records shows that you are considering everything and actively avoiding making mistakes
Would you like to check that you’re meeting your legal obligations? Simply pick up the phone to discuss what you might need 01793 311937 or email us via clientservices@robinsongracehr.com.
Frequently Asked Questions:
1. What are the risks of non-compliance under the Fair Work Agency?
Answer: Non-compliance with employment law under the Fair Work Agency carries significant financial and reputational risks for UK employers. Businesses found to be in breach could face:
Penalties of up to 200% of wage underpayments
Backdated payments covering up to six years
Public naming for minimum wage violations
Legal action, including employment tribunal claims brought by the agency
Even unintentional errors, such as incorrect holiday pay calculations or unpaid working time, can lead to enforcement action. This makes it critical for employers to regularly review their processes and ensure full compliance with UK employment legislation.
2. Can the Fair Work Agency investigate employers without a complaint?
Answer: Yes, one of the most significant changes introduced by the Fair Work Agency is its ability to carry out proactive investigations without an employee complaint. This marks a major shift in UK employment law enforcement, where previously most investigations were triggered by worker reports.
From 7 April 2026, the Fair Work Agency can independently identify and investigate potential breaches of National Minimum Wage, holiday pay, and other employment rights. This means employers may be subject to inspections even if no issues have been raised internally.
As a result, UK businesses should not rely solely on resolving employee complaints but instead adopt a proactive approach to employment law compliance. Regular internal audits, accurate record-keeping, and consistent payroll checks are essential to reduce the risk of unexpected investigations and penalties.
3. What common payroll mistakes could trigger a Fair Work Agency investigation?
Answer: Several common payroll errors could lead to a Fair Work Agency investigation, even where there is no intentional wrongdoing. These include:
Failing to pay for all working time, such as training, travel between sites, or pre-shift duties
Making deductions for uniforms or equipment that reduce pay below the National Minimum Wage
Mismanaging salary sacrifice schemes that unintentionally breach minimum pay thresholds
Incorrect holiday pay calculations, particularly where overtime or commission is excluded
Identifying and correcting these issues through regular payroll audits is essential for maintaining employment law compliance in the UK and avoiding potential penalties or enforcement action.
Check out other Blogs in our series: [choose 3 relevant blogs we have posted]
The content of our blogs is intended for general information and not to replace legal or other professional advice.
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