The Fair Work Agency Launches April 2026

From April 2026, a new government enforcement body - the Fair Work Agency - takes over responsibility for policing employment rights across England, Scotland, and Wales. It consolidates what were previously separate enforcement functions: holiday pay, statutory sick pay, national minimum wage, and agency worker regulations are all now handled by a single agency with significantly enhanced powers. For employers, this means a more coordinated, better-resourced enforcement landscape than anything that existed before.

The Fair Work Agency is one of several major changes introduced by the Employment Rights Act 2025, which also brings changes to unfair dismissal, fire-and-rehire, and statutory pay rates.

What Is the Fair Work Agency?

The Fair Work Agency is a new executive agency established under the Employment Rights Act 2025. It brings together enforcement functions previously spread across HMRC (NMW and SSP enforcement), the Employment Agency Standards Inspectorate (agency worker regulations), and the Gangmasters and Labour Abuse Authority (GLAA). From April 2026, one body investigates and enforces across all of these areas.

The consolidation matters because it removes the gaps that previously existed between enforcement regimes. An employer underpaying holiday pay while also misclassifying agency workers would previously have faced separate investigations by separate bodies. The Fair Work Agency changes that - a single investigation can now examine compliance across multiple areas simultaneously.

Source: GOV.UK, ERA Timeline Update.

What the Fair Work Agency Enforces

Holiday Pay

Calculating holiday pay correctly has been a persistent compliance challenge for UK employers - particularly for workers with variable hours, irregular pay, or multiple pay elements. The Fair Work Agency will enforce holiday pay obligations with the same authority previously reserved for minimum wage enforcement. Employers must be able to evidence correct calculation and payment. The new obligation to keep annual leave and holiday pay records (in force from 6 April 2026) directly supports this enforcement function.

Statutory Sick Pay (SSP)

From 6 April 2026, SSP is payable from day one with no waiting period and no lower earnings limit. The Fair Work Agency takes over SSP enforcement from HMRC. Employers who have not updated their payroll systems and SSP policies before April face immediate enforcement risk.

Agency Worker Regulations

The Agency Worker Regulations 2010 entitle agency workers to the same basic working and employment conditions as comparable permanent employees after 12 weeks. Enforcement has historically been weak - that changes with the Fair Work Agency. Employers using temporary or agency staff should review their compliance with AWR before April.

National Minimum Wage

NMW enforcement transfers from HMRC to the Fair Work Agency. Enhanced powers include the ability to bring civil proceedings on behalf of workers, not just issue penalties.

Why This Matters More Than Previous Enforcement

Previous enforcement was fragmented and under-resourced. The Employment Agency Standards Inspectorate had limited capacity. SSP enforcement by HMRC was rarely proactive. The Fair Work Agency changes both - consolidated funding, consolidated intelligence, and a statutory remit to proactively enforce rather than simply respond to complaints. The government has been explicit that the Agency is intended to shift the balance from reactive to proactive enforcement.

For employers who have been relying on enforcement gaps to avoid compliance costs, April 2026 closes those gaps.

The Three Areas of Highest Immediate Risk

Holiday Pay Calculations

The correct method for calculating holiday pay for workers with variable hours has been settled by case law, but many employers still apply incorrect methods. The Fair Work Agency will scrutinise this. If your holiday pay calculations for irregular-hours workers haven't been reviewed recently, review them now.

SSP Record-Keeping

The new obligation to keep SSP records coincides exactly with the Agency's launch. Employers without adequate records from April 2026 onwards will be unable to evidence compliance if investigated.

Agency Worker Documentation

Employers using agency workers should be able to evidence that each worker's terms and conditions have been reviewed at the 12-week threshold and that pay and conditions have been equalised where required. Most don't have this documented.

What Employers Should Do Before April 2026

1. Review holiday pay calculations - particularly for workers with variable hours, overtime, or commission. Ensure the calculation method reflects current case law.
2. Implement SSP record-keeping - if you don't already have a system for recording SSP payments and absences, implement one before 6 April.
3. Update your SSP policy - to reflect the removal of waiting days and the lower earnings limit, also effective 6 April 2026.
4. Audit agency worker compliance - for each agency worker, confirm whether the 12-week qualifying period has been reached and whether pay and conditions have been equalised.
5. Document everything - the Fair Work Agency's enhanced powers mean that documentation is your primary defence. Policies, calculation records, and audit trails all matter.

How Policy Pros Can Help

Policy Pros can help you get the documentation in place before the Fair Work Agency begins operations. We write SSP policies, holiday pay procedures, agency worker compliance frameworks, and the HR documentation that evidences your compliance.

If your existing documentation needs updating, our policy review service can identify everything that needs changing and deliver updated documents on a fixed-price basis.