The Fair Work Agency: a new approach to labour market enforcement

The Employment Rights Act 2025 created the Fair Work Agency (FWA), which formally came into operation on 7 April 2026. The FWA represents a significant change to the way workers’ rights are enforced in the UK. Rather than introducing new employment rights, it brings together existing enforcement regimes under a single body, aiming to provide a clearer, more effective approach to labour market enforcement.

Why the Fair Work Agency was created

Before 7 April 2026, enforcement of workers’ rights was split across several bodies. These included the Employment Agency Standards Inspectorate (EAS), the Gangmasters and Labour Abuse Authority (GLAA) and HMRC. Each organisation had its own remit, priorities and enforcement style, making it difficult to navigate.

In creating the FWA, the Government is seeking to simplify enforcement by establishing a single, recognisable agency with overall responsibility for labour market compliance and a unified enforcement strategy.

Functions transferred on 7 April 2026

From its launch date, the FWA assumed responsibility for a number of enforcement functions previously carried out by other bodies. In particular, the FWA is now responsible for enforcing:

• the regulation of employment agencies
• financial penalties for failure to pay sums ordered by an employment tribunal or settlement sums agreed in a COT3
• the gangmasters licensing regime and related enforcement action
• compliance with the national minimum wage.

While responsibility for national minimum wage enforcement now sits within the FWA’s statutory remit, the Government has acknowledged that the practical transfer of this function will take time. HMRC will therefore continue to carry out minimum wage enforcement activity during a transitional period, with full transfer to the FWA anticipated in April 2027.

The Fair Work Agency’s future remit

The Government has described 2026 and 2027 as a “transitional year” for the FWA in its Policy paper, Strategic steer to the Fair Work Agency, published on 7 April 2026. During this period, the FWA is expected to focus on reducing regulatory burdens, making better use of data and intelligence to target enforcement, improving awareness of rights and obligations and taking a leading role in shaping best practice across the labour market. Additional regulations will be required to enable the FWA to enforce all of the employment rights that will eventually fall within its remit, including important rights such as holiday pay and statutory sick pay. At present, there is no confirmed start date for the FWA’s enforcement of these rights, although it is anticipated to come into force in 2027.

Looking ahead, the FWA is also expected to become responsible for enforcing new regulation of umbrella companies. The Government has confirmed its intention to regulate umbrella companies in a similar way to employment businesses, with enforcement of the new regime expected to sit with the FWA once the rules come into force.

The Birketts view

The creation of the Fair Work Agency does not change the underlying employment rights available to workers. However, it does mark a shift in how those rights will be enforced and signals a more streamlined and potentially more proactive enforcement regime.

While day-to-day enforcement arrangements may not appear to have changed immediately, the Government’s intention to improve enforcement is clear, and employers should not assume that the changes are purely administrative. As the FWA develops, enforcement is likely to become more visible and more coordinated. Employers should therefore review their compliance in areas already within the FWA’s remit and ensure that their current policies, practices and record‑keeping are sufficiently robust.