Fair Work Agency: a new enforcement era for payroll
The Fair Work Agency is now the UK’s new executive agency for enforcing workers’ rights. For payroll professionals, this is not just a policy update. It is a practical reminder that pay accuracy, holiday records, agency worker processes and statutory payments must be audit-ready.
The agency was formed in April 2026 and is sponsored by the Department for Business and Trade. It brings together the former Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate, National Minimum Wage enforcement team and, the Office of Director of Labour Market Enforcement. Its role is to inspect, investigate and penalise businesses that do not uphold workers’ rights.
The change moves enforcement from a fragmented model to a single contact point for workers and a more joined-up enforcement body for employers. The Fair Work Agency covers National Minimum Wage, employment agency treatment, gangmaster licensing, serious labour exploitation and tribunal award enforcement. It is also expected to take on wider enforcement, including holiday pay and statutory sick pay.
Important points for payroll teams
Check National Minimum Wage compliance across salaried, hourly, apprentice, sleep-in, travel and deduction scenarios.
Keep clear holiday entitlement and holiday pay records, especially for irregular hours and part-year workers.
Review statutory sick pay processes following the April 2026 day one SSP changes.
Make sure agency worker and umbrella arrangements are transparent, documented and contractually accurate.
Treat payroll records as evidence, not just administration.
Rights Acts and regulations to note
- “Employment Rights Act 2025” created the modern framework for the Fair Work Agency.
- “Employment Rights Act 1996” remains central to core employment rights and pay related protections.
- “National Minimum Wage Act 1998” states the right of “Workers to be paid at least the national minimum wage”.
- “Employment Agencies Act 1973” regulates employment agencies and employment businesses.
- “Conduct of Employment Agencies and Employment Businesses Regulations 2003” sets rules on agency conduct, terms, records and restrictions.
Considerations:
Before the Fair Work Agency, a worker with concerns about underpaid minimum wage, poor agency treatment and holiday pay might have faced different routes, depending on the issue. Payroll teams could also find enforcement expectations split across different bodies.
After the change, the worker has a clearer single route, and employers face a more joined-up regulator with inspection, investigation and penalty powers. For example, an agency worker paid below the correct minimum wage and missing holiday pay records could trigger a broader review of pay, contracts, records and agency compliance.
Payroll action this month
Take one worker journey and test it end-to-end. Start with contract type, age band, hours, deductions, absence, holiday, assignment details and payslip output. Then ask: could we provide evidence of this calculation to the Fair Work Agency?
Good payroll has always protected workers and employers. The difference now is that clean records, clear processes and correct calculations are more visible than ever.