I wonder how the Fair Work Agency will impact HR professionals?

In recent years, the debate around UK employment law has shifted firmly towards fairness, transparency, and stronger enforcement. With the introduction of the Employment Rights Bill, the Government has signalled its intention to enhance worker protections while simplifying how rights are upheld in practice.

A central feature of the Bill is the proposed Fair Work Agency (FWA), a single enforcement body designed to replace the current patchwork of regulators. For HR professionals, this represents more than a technical adjustment. The FWA could reshape how organisations approach compliance, employee relations, and risk management.

Research carried out by the Resolution Foundation in 2023 found that 14% of the lowest-paid workers reported that had not received paid holiday. It was estimated that this affected 900,000 UK workers per year, valuing around £2.1 billion (£2,300 per worker).

This article explores what is known so far, what is still under consultation, and what HR needs to do to prepare.

What Is the Fair Work Agency?

The FWA is intended as a centralised body to streamline, strengthen, and simplify enforcement of employment rights. At present, responsibilities are spread across the Employment Agency Standards Inspectorate, HM Revenue & Customs, and the Gangmasters & Labour Abuse Authority. Under the Bill, many of these duties would be brought under the FWA, creating a central point of contact for issues related to:

• Underpayment of wages;
• Unlawful deductions from pay;
• Holiday pay disputes;
• Exploitation of vulnerable workers;
• Non-compliance by employment agencies and umbrella companies; and
• Forced labour and modern slavery in the workplace.

The aim is to reduce fragmentation, improve predictability, increase transparency and enforce employment rights more consistently.

What Powers Will the FWA Have?

Based on current proposals, the FWA will have the following:

• Investigatory powers: Conduct inspections, request records, enter business premises (sometimes unannounced), and demand information.
• Enforcement powers: Issuing legal notices, civil penalties, and in some cases criminal sanctions for serious breaches.
• Proactive enforcement: Initiate investigations, particularly in sectors or areas with persistent non-compliance or risk.
• Expanded scope of enforceable rights: Rights such as holiday pay, previously reliant on individual claims, will fall under state enforcement.
• Flexible remit: The Secretary of State could expand the FWA’s remit through secondary legislation.

The organisational model suggested also involves an advisory board with representation from businesses, unions and independent experts, to provide strategic guidance.

What Remains Under Consultation

Although the FWA could be established as early as April 2026, much is still under discussion:

• Phasing: Not all enforcement powers or all rights will come into effect at the same time.
• Detail of penalties and thresholds: The scale and safeguards around fines and sanctions are yet to be finalised.
• Applicability to different sizes of businesses: Smaller businesses may face disproportionate compliance costs and administrative burdens. Many in the sector have raised concerns during consultation.
• Transitional arrangements: Existing investigatory/enforcement bodies will need to have their functions transferred or wound down; this will require new process, possibly duplication or overlap in early stages

Potential Benefits for HR / Employers

It’s not all extra burden. There are some possible upsides that could make HR’s life easier (and the workplace better):

1. Clearer rules and less legal uncertainty – Having one central enforcement body, clearer legal expectations and fewer overlapping regulators may reduce legal uncertainty.
2. Level playing field – Employers who already strive to comply may find that fewer competitors are able to get away with non-compliance, which can reduce unfair competition.
3. Improved employee relations & retention – Enhanced worker protections often correlate with better morale, trust, and lower turnover.
4. Proactive prevention – Proactive investigations and guidance could help employers stay ahead of risks.

Preparing for the FWA

To be ready, HR professionals should consider the following steps:

1. Stay informed & engage with consultations: Monitor developments in the Bill, especially secondary legislation and consultations. Where possible, HR or their organisations should contribute to consultations to shape outcomes.
2. Review current practices: Audit contracts (particularly around zero/hours, regular hours, variable pay), holiday/sick pay practices, record-keeping.
3. Upgrade systems & processes: Ensure HR information systems can collect and retain the data required.
4. Train managers/leaders: Prepare leaders for new compliance responsibilities and inspection processes.
5. Budgeting & planning: Estimate the cost of compliance (legal advice, potential pay adjustments, system upgrades, etc.) and build into financial planning.
6. Legal counsel linkage: Seek advice on interpreting new regulatory or enforcement guidance, drafting compliant policies and responding to enforcement.

Conclusion

The FWA represents one of the most significant reforms in UK employment law in decades. For HR professionals, it signals a move towards closer scrutiny, stronger worker protections, and a greater emphasis on organisational accountability.

While the transition will bring cost and complexity, it also offers the opportunity to simplify compliance, strengthen workplace trust, and ensure fair treatment across the labour market. HR teams that adapt early, embed compliance into culture, and prepare for enforcement will not only reduce risk but also position their organisations as fair, responsible employers in a changing economy.

Further Advice

If you have any queries on the Fair Work Agency or any other employment-related matters, our Peace of Mind Team is here to provide expert guidance. Our Document Audit Team can also assist in drafting relevant workplace policies.

Contact our Employment Team by emailing employment@warnergoodman.co.uk or calling 023 8071 7717.

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