Date
23 September 2025Updated
23 September 2025
2 min read
What is the FWA?
The Employment Rights Bill, currently a focal point in the employment law landscape, proposes the creation of a new enforcement agency called the ‘Fair Work Agency’. This agency will be tasked with upholding specific employment rights and consolidates existing enforcements efforts under one central authority.
Under the Bill, the FWA will be granted a broad range of powers. These include the ability to request information from individuals and organisations, conduct on-site inspections of documents, and require employers to provide formal undertakings where necessary, explored in more detail below.
As a government-led initiative, the FWA will play a key role in supporting the wider strategic agenda on employment rights. Its establishment will mark a significant shift toward more proactive government enforcement, moving beyond the traditional reliance on employment tribunals. This development highlights the growing importance for employers to maintain clear, compliant policies and robust record-keeping practices.
What Will Fall Under the FWA Remit?
- National minimum wage – currently regulated by the National Minimum Wage enforcement team
- Modern slavery offences
- Statutory sick pay - currently managed by HMRC
- Statutory holiday pay including the right to holiday pay and rolled up holiday pay for irregular hours and part year workers
- An obligation to keep records demonstrating compliance with statutory holiday entitlement for 6 years
- Financial penalties for failure to pay sums ordered by an Employment Tribunal
- Gangmasters licencing
What Powers Will the Fair Work Agency Have?
Exactly what powers the FWA will have, and in what form, is not certain until at least April 2026 however below is a non-exhaustive list of some of the powers which will be relevant to employers.
Penalties: for failure to pay employees and workers their statutory entitlements, the FWA will have powers to issue a notice, requiring them to pay what they owe within a set time frame and pay a penalty for the failure. It’s uncertain exactly what these penalties will be until this comes into force but it’s likely to be 200% of the sum due, capped at £20,000.
Considering some of these underpayments can go back up to 6 years, it’s significantly important to ensure your business’ practices on paying statutory entitlements are watertight.
Inspection: they will have the power to carry out investigations and demand to inspect documentation. It is likely that inspections will be triggered by a report of non-compliance to the FWA however there seems to be the possibility for ‘spot checks’ too.
Issue enforcement orders: requiring the employer to correct their behaviour and breaches of such orders could result in fines.
Cost recovery: if the FWA have had to take enforcement action against you as an employer, you may be liable for their enforcement costs.
What Does FWA Mean for Employers?
The FWA is not introducing radical reform—it’s consolidating the responsibilities currently spread across various government bodies and regulatory agencies. Its mission is twofold: to support employers in meeting their obligations and to ensure accountability where workers’ rights are at risk.
Although the FWA is not expected to be fully operational until at least April 2026, its upcoming launch serves as a timely reminder for employers. Most are already compliant with key employment rights, but now is the moment to double-check that all statutory entitlements, particularly around holiday pay, are correctly applied and clearly documented.
