The Fair Work Agency (FWA) launched in April 2026 as the new single body responsible for enforcing key workplace rights committed to modernising and strengthening the way employment rights are upheld in the UK. The FWA has now published its delivery plan for 2026 to 2027 setting out how it intends to operate, and six months in, we are gaining a good sense of what compliance scrutiny and enforcement will look like. Employers should be preparing for a more proactive and joined-up approach to employment law enforcement.
Which powers are live and what is to come
The FWA was established under the Employment Rights Act 2025 and operates as an executive agency of the Department for Business and Trade (DBT). As explained in this May 2026 Keynote, the FWA does not create new employment rights but significantly changes how existing rights are enforced. It places emphasis on increased proactive scrutiny, visibility, and enforcement intensity. The FWA brings together the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority, and the Office of the Director of Labour Market Enforcement into a single enforcement body responsible for enforcing key workplace rights, including minimum wage enforcement, agency worker regulation, and labour exploitation oversight.
The FWA delivery plan outlines five step changes in its foundational strategy indicating an intention to move away from a reactive to a more visible, data-driven, and proactive approach. Its main enforcement powers went live on 7 April 2026 for certain areas; others are being turned on gradually through 2026 and into 2027.
Transfer of National Minimum Wage enforcement
The FWA already has formal responsibility for enforcing the national minimum wage, but HM Revenue & Customs is continuing to carry out the day-to-day work until the full transfer in April 2027. HMRC staff will then move across to the agency and take direct operational control. The FWA’s delivery plan commits to a smooth handover securing real-time access to the relevant HMRC systems, but employers should expect a transitional period in which responsibilities and points of contact continue to settle.
Employers should not underestimate the significance of bringing this previously fragmented landscape into a unified intelligence-led enforcement body under one regulator. The creation of one unified case management system using integrated intelligence is likely to be better at spotting non-compliance than the patchwork it replaced. The FWA plans to develop open-source data-scraping capability, procure a unified case management system with integrated AI, and maximise access to data and management information across the organisation.
Employers should therefore expect a more proactive and co-ordinated enforcement approach across multiple areas of workforce compliance. Social care, retail, hospitality,
and construction sectors are likely to be under particular scrutiny as the FWA signals its intention to deepen its understanding of high-risk sectors.
Holiday pay enforcement is next in line
Holiday pay is next on the FWA’s list, with plans to start enforcing holiday pay in April 2027. Its delivery plan indicates it is already preparing the ground by introducing a new enforcement approach, together with guidance and practical tools to help employers get holiday pay right. The Government’s consultation on holiday pay compliance and enforcement closed on 22 September 2026, with the formal response still to be published.
The direction suggested by that consultation is a ‘support first’ approach, with employers given guidance and a chance to put underpayments right before the Agency reaches for tougher measures. The tougher measures are significant. The FWA’s penalty regime is already in force for minimum wage underpayments where it can require the shortfall to be made good and impose a penalty of 200% of the underpayment, capped at £20,000 per affected worker and halved to 100% where payment is made within 14 days. From April 2027, when the FWA is expected to begin enforcing holiday pay, that same regime will extend to holiday pay shortfalls. The consultation also floats naming and shaming employers who underpay holiday pay, mirroring what already happens with minimum wage breaches.
The FWA is expected to build an online holiday pay calculator and a plain-English payslip explainer, both intended to make compliance easier for employers and pay clearer for workers. A calculator may be helpful and a welcome tool but is unlikely to capture the full complexity of the holiday pay rules and solve the uncertainty that still surrounds this area.
What employers should do now
The FWA has been busy recruiting staff to support its ability to take on all these powers. The broader direction is clear; the FWA will not wait for complaints but intends to identify non-compliance through worker complaints, referrals from other public bodies, partner-agency intelligence, proactive compliance activity, and analysis of data and risk indicators. Employers who are proactive during this transitional stage will put themselves in a strong position when the FWA is fully up and running.
At this stage, employers should consider the following:
National Minimum Wage audits: Enforcement will fully transfer to the FWA in April 2027, and employers should be proactive in ensuring compliance. Minimum wage, holiday pay, and sick pay underpayments are often inadvertently caused by deductions for uniform, equipment or training, and by unpaid working time, and these types of breaches are exactly what the FWA will be built to detect.
Holiday pay calculations audits: The FWA will start enforcing holiday pay in April 2027 and so now is the time employers should check holiday pay calculations, particularly
where staff have variable hours, earn commission, or regularly work overtime. Employers need to be particularly careful to keep records as they will be more exposed to the recent change in law for failure to keep adequate records of holiday entitlement, holiday pay, and payments in lieu for six years. Since 6 April 2026, a failure to do so has been a criminal offence punishable by a fine. Businesses that may have labelled workers or employees as ‘self-employed’ would also be wise to revisit that now rather than later.
Audit employment status: Where employers engage freelance workers or have labelled workers or employees as ‘self-employed’, they are advised to audit employment status now to ensure they can correct any worker misclassification.
Look out for the outcome of the holiday pay consultation: This consultation will cover important details of how the FWA will enforce statutory holiday pay from 2027, including penalties, possible public naming of non-compliant employers, the period over which underpayments may be pursued, targeting of enforcement, and compliance support.
Keep abreast of changes: The FWA intends to publish a three-year Enforcement Strategy in April 2027, which will set out refined, outcome-focused metrics for the period 2027 to 2030. Employers can visit gov.uk for updates to find compliance resources, the promised holiday pay calculator, and other guidance and digital tools that may be developed.
If you have any questions or concerns about the Fair Work Agency and how your organisation can prepare, please contact Velma Eyre.
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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.