Employment Rights Bill essentials: Preparing for the Fair Work Agency (FWA)

Among the measures set out in the Employment Rights Bill, the Government is proposing to establish a single, consolidated body to monitor and enforce core employment rights: the Fair Work Agency (FWA). Lilia Dangi looks at the implications for employers and HR professionals. 

The Fair Work Agency (FWA) is intended to create a more predictable, accessible and robust framework to address long-standing criticisms of fragmentation and inefficiency in the current system for enforcing rights. The FWA marks a shift from reactive enforcement to proactive accountability, aligning with the Government's broader goal of addressing "one-sided flexibility" and strengthening protections for zero hour and gig workers, as well as other non-traditional workers. For employers, this means adjusting to a more transparent and regulated work environment.

What will change?

Rather than relying solely on individuals to bring complaints, the FWA will carry out targeted investigations into employment law breaches. According to the Fair Work Agency factsheet: "The FWA will aim to resolve issues upstream by supporting employers that want to comply with the law. But it will also have strong powers to investigate and take action against businesses that flout the law, to level the playing field for compliant businesses."

This could be especially beneficial in sectors with high levels of insecure work, such as logistics, hospitality and social care.

The agency will be equipped with broad investigatory and enforcement powers, including the ability to conduct inspections, impose penalties and initiate prosecutions.

The FWA will consolidate the functions of three existing regulators:

• Employment Agency Standards Inspectorate (EAS)
• HMRC's national minimum wage enforcement teams
• Gangmasters and Labour Abuse Authority (GLAA)

As part of this reform, the GLAA and the role of Director of Labour Market Enforcement will be abolished. The FWA's remit will be wider than those of existing agencies and include:

• enforcing statutory entitlements such as holiday pay (not currently within the scope of existing agencies) and the minimum wage;
• issuing legal notices and inspecting business premises;
• bringing employment tribunal claims on behalf of workers, without requiring their direct involvement; and
• imposing civil and criminal penalties, including fines of up to 200% of an underpayment (minimum £100; maximum £20,000 per worker).

The Secretary of State will retain the power to expand the FWA's remit through secondary legislation, to ensure that the FWA can adapt over time to address emerging challenges in the labour market and expand its enforcement capabilities as needed.

The Government has also confirmed that the FWA will be supported by an advisory board composed of equal representation from business leaders, trade unions and independent experts. This board will operate under a social partnership model and will provide strategic advice to the FWA to ensure its enforcement activities are fair, balanced and effective.

Implications for HR professionals

The creation of the FWA signals a major shift in the employment enforcement landscape. For HR professionals and business leaders, this means adapting to a more proactive and visible compliance environment.

Key implications:

• Single point of contact: The FWA's "one-stop shop" model simplifies access for employers and employees but also increases regulatory scrutiny and coordination of enforcement actions.
• Wider enforcement scope: Areas previously underenforced, such as holiday pay, will now be actively monitored.
• Enhanced inspection powers: The FWA can conduct unannounced inspections, demand records and issue enforcement undertakings. Non-compliance may result in significant fines or even custodial sentences.
• Personal accountability: Company directors and senior managers may be held personally liable for breaches.
• Increased tribunal activity: The FWA can initiate tribunal claims and provide legal representation for workers, likely increasing the volume and visibility of cases and raising reputational risks for employers.

Practical steps: How employers can prepare

HR professionals should treat these changes not only as compliance requirements but also as an opportunity to strengthen their organisation's commitment to fair work.

Employers could take the following steps to make sure they are well prepared for the introduction of the FWA:

• Audit pay practices: Review minimum wage and holiday pay policies and practices to ensure compliance, particularly for irregular and zero hours workers.
• Strengthen supply chain oversight: Increase due diligence on contractors, umbrella companies and outsourced services. The FWA may hold end-users accountable for third-party violations.
• Improve documentation: Ensure that your processes allow you to maintain clear records of pay, hours worked, holiday entitlements, right-to-work checks and contracts.
• Train line managers: Equip managers who work with contingent staff to understand their responsibilities and avoid exposing the organisation to potential risks.
• Enhance whistleblowing channels: Foster a culture where employees feel safe reporting concerns. Implement anonymous reporting mechanisms that align with anticipated FWA standards, such as secure online portals, whistleblower hotlines and protections for individuals who choose not to disclose their identity.
• Stay informed: Monitor legislative updates and guidance as the FWA's structure and remit evolve. Compliance requirements may change over time.

What's next?

On 1 July 2025, the Government published a policy paper, Implementing the Employment Rights Bill, confirming that the FWA will be established in April 2026. However, the timeline for when its enforcement powers will come into effect has not yet been announced.

Employers should begin preparing now to ensure readiness when the agency becomes fully active.