Contents:
- What is the Fair Work Agency?
- What is the Make Work Pay initiative?
- What are the key goals and reforms of the Make Work Pay initiative?
- What powers does the Fair Work Agency have?
- How should employers prepare for Fair Work Agency enforcement?
- Frequently asked questions
- Maintain clear, consistent pay records with PeopleHR
What is the Fair Work Agency?
The Fair Work Agency (FWA) is a government body that brings together the enforcement of key employment rights in one place. It launched on 7 April 2026 and is intended to protect workers, support fair competition, and help employers comply with the law.
The FWA currently oversees areas including National Minimum Wage compliance, employment agencies, and businesses and gangmaster licensing. Its remit is expected to expand, including responsibility for holiday pay, so employers need to keep track of which requirements are in force and when.
What is the Make Work Pay initiative?
Make Work Pay is the government's wider programme of employment law reform, designed to improve job security, pay, working conditions and employment rights. The Employment Rights Act 2025 is a key part of delivering these commitments, with reforms being introduced gradually throughout 2026 and 2027.
The FWA is one part of this wider programme. While Make Work Pay covers changes to employment rights and workplace practices, the FWA provides a stronger enforcement framework for certain labour market rights. The programme also builds on earlier measures such as the Good Work Plan.
What are the key goals and reforms of the Make Work Pay initiative?
Make Work Pay covers a broad range of reforms affecting how employers recruit, manage and pay their workforce. Let’s look at the key goals of this initiative.
End insecure work
Make Work Pay aims to reduce insecure working arrangements and give workers greater predictability. This includes reforms affecting zero-hours contracts, alongside measures intended to prevent employers from using fire-and-rehire practices unfairly.
Day one rights
Several reforms strengthen employment rights from the beginning of employment. For example, Statutory Sick Pay and certain parental leave rights have gained day-one eligibility, while other proposed changes will take effect later.
Flexible working
The reforms aim to build on existing rights for employees to request flexible or hybrid working arrangements. This doesn’t mean that every request has to be accepted, but employers must follow the correct process and have a legitimate reason where a request is refused.
Fair pay and enforcement
Make Work Pay also focuses on fair pay and stronger enforcement of employment rights to ensure that employees are rewarded fairly for their work. The FWA provides a single enforcement framework for several areas, while Fair Pay Agreements are intended to establish minimum standards in sectors such as adult social care.
Union access
The reforms also modernise trade union rights, including changes to statutory recognition and balloting processes. Some measures have already taken effect, while others are being introduced later in 2026 and 2027.
What powers does the Fair Work Agency have?
The Fair Work Agency has several important powers that enable it to support UK workers and ensure that employers are meeting their obligations. As a fairly new entity, some of its powers are still being developed.
Carrying out workplace inspections
FWA officers can enter business premises at a reasonable time to inspect relevant records and equipment. They can also seize documents where the law permits them to do so, meaning that employers should be prepared for an investigation to involve more than a request for paperwork. It’s important to note that these aren't health and safety inspections. The FWA’s role is focused on employment and labour market legislation rather than general health and safety.
Requesting records and evidence from employers
FWA officers can obtain information and evidence needed to investigate potential breaches. This could include employment records, payroll information and other documents that demonstrate whether workers have received their legal entitlements. Maintaining accurate payroll reports makes it easier to provide the relevant information if it’s requested.
Issuing fines to employers who have underpaid staff
Where an employer has underpaid a worker, enforcement can require the outstanding amount to be repaid. Financial penalties can also apply, with the existing National Minimum Wage framework allowing a penalty of 200% of the underpayment, subject to minimum and maximum limits. An underpayment doesn’t have to be deliberate for an employer to face consequences. Regularly checking for payroll mistakes is therefore an important part of maintaining compliance.
Publicly naming non-compliant businesses
Being named publicly as a non-compliant employer carries consequences that go beyond the fine. In October 2025, the Department for Business and Trade named 491 employers for failing to pay the National Minimum Wage, including well-known businesses such as Holland & Barrett and Centrica. Once a business is named, the record is public and searchable. That affects recruitment, client relationships and supplier trust, not just the immediate penalty. Regular payroll checks can help employers identify problems before they escalate. A payroll due diligence checklist can provide a useful framework for carrying out those checks.
Taking cases to an employment tribunal on behalf of an employee
The legislation will give the Secretary of State powers to bring employment tribunal proceedings on behalf of workers in certain circumstances. However, this particular power isn’t yet in force. The position may change as further parts of the Employment Rights Act 2025 are implemented, so it’s important to monitor official guidance.
Legally requiring employers to change their practices
The FWA can use enforcement measures designed to prevent labour market offences from continuing or recurring. The focus can therefore extend beyond an individual breach to wider systemic change and legal compliance. This could require changes to processes, management practices or improving company culture.
Recovering enforcement costs from employers
Enforcement action can create costs beyond any unpaid wages or financial penalties. Depending on the legislation and type of enforcement action involved, an employer may also be required to meet costs associated with the enforcement process. Identifying and correcting issues before they develop into formal enforcement action can help to limit the financial and operational impact.
How should employers prepare for Fair Work Agency enforcement?
Preparing for the Fair Work Agency means checking the systems that underpin employment compliance, not just reacting when an investigation begins. As Make Work Pay reforms continue to take effect, employers should use this opportunity to review their existing arrangements.
Review your pay and holiday calculations
Check that workers are receiving the correct wages, Statutory Sick Pay and holiday pay. Pay particular attention to variable hours, overtime, deductions and changes to statutory rates, where errors can easily occur. Employers should also check how wages are calculated for different working patterns, including calculating holiday pay for variable-hour workers.
Check that employment records are complete and accurate
Accurate records provide evidence that your employment processes are compliant. Check that information covering hours, pay, leave, contracts and worker details is complete and consistent. Regular checks can also identify discrepancies before they’re discovered during an investigation.
Review your workplace policies and procedures
As Make Work Pay introduces further changes, regular reviews will become increasingly important. Review policies and procedures to make sure they reflect current employment law and your organisation’s actual practices. This could include policies covering pay, leave, flexible working, grievances and raising concerns.
Update employment contracts and written terms
Check that contracts and written statements accurately describe the terms on which people work, including pay, hours and leave. Where employment law changes, update documentation and processes so that they continue to reflect employees' actual rights.
Check arrangements with agencies and umbrella companies
Don’t assume that outsourcing to agencies or bureaus removes your responsibility to check that arrangements are working correctly. Review third-party contracts and payment arrangements, particularly where workers are paid through umbrella payroll.
Make sure workers know how to raise concerns
Workers should have a clear route to raise concerns about pay, working conditions or employment rights. Make sure they know who to contact and that the process is accessible. This can help you to identify potential problems internally before they develop into external enforcement action.
Train managers on their compliance responsibilities
Managers make decisions every day that can affect employment compliance, from approving hours to handling absences and flexible working requests. They need to understand how those decisions can affect workers’ rights and wider payroll compliance responsibilities.
Familiarise yourself with the FWA’s enforcement approach and guidance
Employers should familiarise themselves with the FWA’s enforcement policy and keep up with updates as its remit develops. Understanding the Agency’s approach can help businesses know what to expect if they’re investigated, and what information they may need to provide.
Fair Work Agency Frequently asked questions
What is the Fair Work Agency?
The Fair Work Agency is a government body that brings together enforcement of key employment rights. It launched on 7 April 2026 and currently covers areas including National Minimum Wage compliance, employment agencies and gangmaster licensing.
What powers does the Fair Work Agency have?
The Fair Work Agency can investigate suspected labour market breaches, inspect relevant premises and records, and obtain evidence. It can also use enforcement measures, including civil penalties. As a developing initiative, more powers and responsibilities are expected to come into force over the following months.
What is the Make Work Pay initiative?
Make Work Pay is the government's wider programme of employment reforms covering areas including pay, job security, flexible working and employment rights. The Employment Rights Act 2025 is a key part of delivering the programme.
What should employers do to prepare for Fair Work Agency enforcement?
Employers should review pay calculations, employment records, contracts, policies and arrangements with agencies or umbrella companies. They should also train managers and stay up to date with FWA guidance as its remit develops.
What happens if an employer fails to comply with the Fair Work Agency?
The consequences depend on the legislation and nature of the breach, but enforcement can include repayment of underpaid amounts, civil penalties and other enforcement measures. Non-compliant employers may also face reputational consequences by being publicly named.
Maintain clear, consistent pay records with PeopleHR
The Fair Work Agency strengthens the UK’s approach to employment rights enforcement, while Make Work Pay introduces wider reforms that employers need to prepare for. Keeping accurate pay calculations, employment records, contracts and policies will help businesses to demonstrate compliance and identify issues early.
PeopleHR’s flexible payroll solutions can help employers manage these processes and maintain consistent records in one place. With accurate payroll and streamlined processes in place, businesses gain better visibility over the information they need.
Watch a 4-minute demo to see how PeopleHR can support your payroll processes, or contact us for more information.
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