On April 7, 2026, the Fair Work Agency (“FWA”) was established as a new single enforcement body for employment rights in the UK, operating under the framework set out in Part 5 of the Employment Rights Act 2025 (“ERA”). In this alert, we provide an overview of the FWA and its civil and criminal investigation and enforcement powers and some practical considerations for employers.

What is the FWA?

As an executive agency of the Department for Business and Trade (DBT), the FWA consolidates a range of labour market enforcement functions previously exercised by separate bodies, including:

• Enforcement of employment agency standards, formerly carried out by the Employment Agency Standards Inspectorate (EASI);
• Gangmaster licensing requirements and protections against serious labour exploitation, formerly overseen by the Gangmasters and Labour Abuse Authority (GLAA); and
• Enforcement of pay‑related rights, including the national minimum wage (“NMW”) and national living wage, which will transfer to the FWA from His Majesty’s Revenue and Customs (HMRC) in April 2027.

Enforcement powers

For employers, the establishment of the FWA reflects a shift from a predominantly complaint‑driven enforcement model towards more proactive regulatory oversight of labour standards in relation to the legislation in scope of the FWA’s remit (i.e. “relevant labour market legislation” listed in Part 1 of Schedule 7 of the ERA).

The FWA has broad supervisory and investigatory powers, including the ability to proactively initiate investigations into suspected breaches of relevant labour market legislation. In particular:

• Search powers: FWA enforcement officers may enter premises (subject to obtaining the necessary warrants) and compel the production of specified information and documents.
• Notices of Underpayment: The FWA may issue notices of underpayment where an employer has failed to pay sums due under specified statutory pay provisions (including, in due course, NMW, statutory sick pay, and holiday pay), requiring payment of the outstanding amount within 28 days. A notice can capture: (i) “underpayments” (sums owed to each underpaid individual), going back up to six years from the date the notice is issued; and (ii) penalties of 200% of the amount specified in the notice (subject to a minimum of £100 and a maximum of £20,000 per individual). A single notice may cover multiple workers. As such, where underpayments affect multiple workers across a workforce, employers could be faced with significant financial exposure from combined arrears and penalties.
• Criminal enforcement: Where there is evidence of a criminal labour market offence (i.e. an offence under the relevant in-scope labour market legislation), the FWA may use “labour market enforcement undertakings” (“LME Undertakings”) and “labour market enforcement orders” (“LME Orders”). An LME Undertaking is a voluntary agreement between the FWA and a person or business that the FWA believes to have committed a criminal labour market offence, setting out the steps that must be taken to prevent further offending and protect workers. Where appropriate, an LME Undertaking may remain in force for up to two years. Where a person or business does not agree to enter into an undertaking within the statutory period, or where the undertaking is breached, the FWA may apply to court for an LME Order. An LME Order may remain in force for up to two years and may be varied or discharged by the court on application.
• Costs: Secondary regulations may require a person who has failed to comply with any relevant labour market legislation to pay a charge relating to the enforcement costs incurred by the FWA. The amount may be a fixed sum or calculated by reference to an hourly rate. These cost provisions must be introduced by secondary legislation, and it is not clear when these will be introduced or how robustly costs will be enforced, but this provision at least theoretically represents a potential to shift the cost of enforcement directly onto non-compliant employers.

Employment rights

The FWA will have oversight over a wide range of employment rights, including monitoring compliance with holiday pay and statutory sick pay rules. For example, the FWA will ensure that all employers keep records to demonstrate compliance with holiday entitlement and holiday pay for six years from the date the records were made (failure to do this is a new criminal offence under the ERA, punishable by a fine).

Significantly, the FWA will have the ability to bring civil proceedings on behalf of workers in the Employment Tribunal. In reality, it is expected that this power will only be used where a large number of people have been impacted or there is a strategic aspect to such litigation. The FWA will also be able to provide legal assistance, including legal advice and representation, to employees (and potentially employers and trade unions) wishing to bring employment claims and to recover the costs of doing so. This assistance will not extend to offering facilities to settle a dispute (e.g., mediation). It remains to be seen how the role of the FWA here will interact with the current roles of ACAS.

Modern slavery offences

The FWA is also now responsible for enforcing provisions of the Modern Slavery Act 2015 (“MSA”) relating to offences of slavery, servitude and forced or compulsory labour, as well as associated prevention and risk orders. The FWA can investigate modern slavery across all industry sectors in England and Wales. In exercising these functions, the FWA will operate within a multi‑agency framework, working alongside the police, the National Crime Agency and other law enforcement bodies, and has defined statutory investigatory and enforcement powers for criminal investigations into relevant MSA offences within its remit. Note that there is the potential for further regulation in relation to modern slavery/forced labour (about which see our recent post here). Though it is not yet clear where that regulatory landscape is headed, if there is further regulation, it is possible the FWA could also be a key regulator in that context.

Effectiveness in practice

While the agency consolidates a broad enforcement remit, the extent to which the FWA drives a sustained change in labour market enforcement will depend on its operational capacity and resourcing over time. It is not yet clear how the FWA will be funded or how it will navigate the 2026–2027 “transitional year”, which the Government frames in its policy paper as a period of “enhanced business as usual”. During this period, the FWA is expected to maintain at least the level of operational performance delivered by its predecessor bodies and to meet the same performance metrics previously applied across EASI, GLAA and HMRC’s National Minimum Wage functions.

Practical implications for companies

As the FWA becomes fully operational, organisations can begin to prepare for potential interactions with the agency by:

• Reviewing labour standards practices (e.g. compliance with existing employment rights, such as national minimum wage, holiday pay and agency worker rights) to inform assessment of potential risks.

• Ensuring that all statutory pay provisions are correctly calculated and applied, given that the FWA’s notice of underpayment regime can capture underpayments going back up to six years from the date a notice is issued.

• Maintaining accurate and comprehensive labour-related records.

• Developing a response plan to handle interactions with the FWA, including inspections and information requests.

• Monitoring forthcoming guidance from the FWA, including on the exercise of its new power to bring Employment Tribunal proceedings on behalf of workers.

You can read more about further changes under the Employment Rights Act here and our UK Business and Human Rights landscape: 2026 Outlook here.