The UK’s employment landscape is set to undergo significant changes with the introduction of the Fair Work Agency (FWA), a newly proposed government body designed to strengthen the enforcement of employment rights. As part of the Employment Rights Bill, the Labour government aims to consolidate and expand the enforcement roles of existing agencies, ensuring greater compliance with labour laws.
For businesses in construction, contracting, and beyond, these regulatory changes will have a direct impact on payroll and worker compliance. At The Infinity Group, we stay ahead of evolving regulations to help our clients navigate complex compliance requirements.
What Is the Fair Work Agency (FWA)?
The FWA will serve as a centralised enforcement body, combining the responsibilities of three existing regulators:
- HMRC’s National Minimum Wage (NMW) enforcement team – Ensuring compliance with minimum wage laws.
- Gangmasters and Labour Abuse Authority (GLAA) – Addressing modern slavery and labour exploitation.
- Employment Agency Standards Inspectorate (EAS) – Protecting the rights of agency workers.
Additionally, the FWA will take over the enforcement powers of the Director of Labour Market Enforcement, including the ability to issue financial penalties against employers who fail to comply with tribunal awards.
Key Areas of Enforcement
The FWA will have the authority to regulate several critical areas of employment law, including:
- National Minimum Wage (NMW) – Ensuring that workers receive the correct pay.
- Modern Slavery Laws – Preventing worker exploitation and forced labour.
- Statutory Sick Pay (SSP) – Introducing state enforcement of sick pay entitlements.
- Holiday Pay Compliance – Enforcing correct calculations and payments of holiday pay.
- Agency Worker Rights – Regulating employment agencies and labour providers.
- Employment Tribunal Awards – Issuing financial penalties to employers who fail to pay compensation ruled by employment tribunals.
Over time, the FWA’s enforcement remit may expand to include discrimination laws, flexible working rights, paternity and maternity protections, and more.
What Powers Will the FWA Have?
The Fair Work Agency will have broad enforcement powers, including:
- Requesting documents and records – Employers may be required to submit financial documents or answer compliance-related inquiries.
- Conducting workplace inspections – The FWA will have the authority to enter business premises and examine payroll records.
- Issuing compliance notices and penalties – Non-compliance with regulations may result in corrective action requirements and financial penalties.
With these extensive powers, businesses that fail to meet compliance standards may face costly penalties, legal scrutiny, or reputational damage.
Why Is the FWA Significant for Employers?
The most notable change under the FWA is its enforcement of holiday pay rights, which has historically been an area of confusion for employers.
Many businesses struggle with complex holiday pay calculations, especially in industries like construction and contracting where work arrangements vary. The FWA will have the authority to issue fines and legal action against employers who miscalculate or withhold holiday pay.
Additionally, the FWA’s increased focus on NMW compliance will require businesses to closely monitor their payroll to ensure all workers receive the correct pay under HMRC regulations.
How Can Employers Stay Compliant?
With stricter regulations and increased enforcement, businesses must take proactive steps to ensure payroll compliance. At The Infinity Group, we provide payroll and compliance solutions to help businesses avoid risks, reduce administrative burdens, and meet evolving legal requirements.