Introducing The Fair Work Agency: What it means for your business

Making Tax Digital: The why, what, when and how 

Championed as a single enforcement body for workplace rights, The Fair Work Agency is the government’s attempt to streamline how employment laws are enforced.

It is set to be introduced as part of an historic raft of reforms under the Employment Rights Bill, which features stronger protections for zero-hours and agency workers, improved statutory sick pay and family leave, and day-one rights for unfair dismissal.

The Bill is expected to gain Royal Ascent in the second half of this year, with parts of it becoming law as early as April 2026. The Fair Work Agency is set to be gradually introduced, with its scope widening as further elements of the Bill are introduced.

The agency will bring enforcement powers which are currently spread across several different agencies under one roof, including:

• HMRC, in relation to minimum wage breaches
  
  
• The Gangmasters and Labour Abuse Authority, which focuses on labour exploitation
  
  
• The Employment Agency Standards Inspectorate, in relation to employment agencies
  
  
• Employment Tribunals, which deal with employment disputes made by employees

What will the Fair Work Agency cover?

The centralisation of the work of these bodies under the auspices of The Fair Work Agency will see it become responsible for a variety of issues such as the underpayment of wages, any unlawful pay deductions, holiday pay disputes, exploitation of vulnerable workers, and modern slavery.

The government’s aim is for the agency to improve compliance and target rogue employers. It is expected to have a wide-ranging set of powers, with potential to:

• Investigate workplaces even when there has not been a complaint. Targeted spot checks and inspections will be used to tackle potential exploitation.
  
  
• Issue Notices of Underpayment if employees haven’t received the statutory payments they are entitled to. The agency will have the power to issue fines for non-compliance, as well as to instruct employers to pay what they owe.
  
  
• Require organisations to hand over documents or data relating to employment law compliance, including payslips, contracts, right-to-work paperwork, or holiday records.
  
  
• Take legal action without an employee being involved. The agency will have the ability to bring an employment tribunal claim on behalf of a worker, even if someone doesn’t want to take action themselves.
  
  
• Recover enforcement costs from employers, meaning non-compliant businesses will end up footing the bill for any investigation.
  
  
   

Umbrella industry regulation to fall under Fair Work Agency control

The Employment Rights Bill also includes new regulation relating to the policing of the umbrella industry.

While most umbrella companies are compliant, a minority of non-compliant operators work to avoid tax and exploit workers.

The new legislation will clearly define umbrella companies, extending regulatory oversight initially under the control of the Employment Agency Standards Inspectorate but eventually under the Fair Work Agency.

The key changes brought in by the Bill are likely to include:

• umbrella companies won’t be able to withhold the payment of their workers if an end user client fails to pay a recruitment business.
  
  
• umbrella companies will not be able to place restrictions on their workers from being engaged elsewhere unless they are an employee of the umbrella company engaged under a contract of service.
  
  
• umbrella companies and their directly engaged workers will no longer be able to opt out of the application of the Conduct Regulations, unless the worker is also supplying their services via their own personal service company.
  
  

Will the Fair Work Agency make a difference to your business?

The good news is that if your organisation is already compliant then the introduction of the Fair Work Agency will likely make no difference to you.

However, it will mean that there will be more claims in general. With the agency able to bring action on a worker’s behalf, and even without their involvement, businesses could face claims without even having heard a complaint.

The agency will also have the power to offer claimants legal assistance, meaning more cases will reach the tribunal stage.

Companies are set to face the potential for greater scrutiny, with the Fair Work Agency able to proactively inspect workplaces, ask for evidence, and take enforcement action even if a worker doesn’t make a complaint.

Finally, those found to have breached employment laws, could be named publicly and may have to pay the cost of any investigation or enforcement action. The reputational risk this brings are real, but the changes also offer opportunities for businesses to shore up their HR and compliance practices.

Those organisations which deal with employees in a compliant way when it comes to pay, working hours, holiday and fair treatment at work will have a far greater chance of avoiding any involvement with the Fair Work Agency.

Keeping up-to-date and accurate records, and being on top of any legal changes, will also help your cause. And if things do go wrong, having the correct insurance policy can provide vital protection against claims.