The Employment Rights Bill, which recently passed its third reading in the House of Lords, will establish the Fair Work Agency (FWA) – a new single enforcement body responsible for upholding key employment rights.
What will the Fair Work Agency do?
The FWA will be an Executive Agency of the Department for Business and Trade and will be responsible for enforcing employment legislation as a single point of contact between employers and employees The FWA will have the power to oversee and enforce a range of employment rights including National Minimum Wage, statutory sick pay, holiday pay, whistleblowing protection, collective consultation and redundancy rights, as well as unpaid employment tribunal awards.
“The agency has a vital job in strengthening labour market compliance and enforcement. This is essential to provide workers with protection and employers with a supportive and level playing field on which to invest and grow.”
Matthew Taylor, Chair of the Fair Work Agency
The agency will have the power to investigate and inspect records kept by employers. Employers can be ordered to disclose evidence to demonstrate compliance with employment law. If breaches of employment rights are found, the FWA will be able to issue ‘Notices of Underpayment’ requiring the employer to pay the employee what they are owed and a penalty to the Government.
Holiday pay will be a key focus of the FWA, with the power to order repayment of unpaid holiday pay within 28 days, impose fines of up to 200% of the unpaid and enforce claims stretching back six years. There may also be a new criminal offence introduced of failing to keep adequate holiday records.
The FWA may also be able to support employees legally in bringing cases against their employers, or even take cases to a tribunal for them, as well as speed up repayment processes.
The FWA is expected to launch in April 2026, following consultations and secondary legislation. Some enforcement powers may phase in gradually.
What should employers do now?
Employers should be looking to get their records in order now, ready for any possible FWA inspection in 2026.
- Audit risk areas: Review your employment contracts to make sure that at least the minimum legal entitlements are met. Ensure pay systems are up to date along with your record keeping. All records should be updated and available. Dispute handling processes should also be reviewed and updated to comply with employment rights and the law.
- Simplify policies: Make sure your workplace policies are clear, jargon-free and accessible to all staff.
- Stay informed: Track Government updates and draft guidance issued by the Department for Business and Trade.
- Train staff: train colleagues how to handle queries and compliance issues. Guidance and training should include legal entitlements of employees, record-keeping obligations, best practices, and the powers of the FWA.
Philip McCabe, 7 November 2025