With the new Fair Work Agency (FWA) due to be officially established in April 2026, the groundwork and key appointments are in progress, but what is the new body and how will it work?

With around 900,000 UK workers per year estimated to have their holiday pay withheld (worth around £2.1 billion), and around 19% of lowest paid workers being paid below the minimum wage, a key priority for the new agency is to protect workers and level the playing field for business that do pay fairly.

Established within the Employment Rights Bill (ERB), the FWA will become a new single body to take on enforcement of a wide range of employment rights to protect workers from employers that flout minimum wage, statutory holiday pay and other labour laws. Over time, its responsibilities will also include overseeing future regulation of umbrella companies.

The current system of state enforcement by several bodies is fragmented and does not, in some cases, enable workers to enforce their own rights. The FWA aims to bring together existing state enforcement functions and, over time, extend its remit to a wider range of employment rights with the underlying aim of being a single place from which to support workers and compliant businesses.

Who is running it?

The FWA will be an Executive Agency of the Department for Business and Trade (DBT), with work carried out by enforcement officers and staff appointed by and working within the DBT.

In October 2025, Matthew Taylor CBE, was appointed as chair of the new agency. Currently Chief Executive of the NHS Confederation, he led the Taylor Review of Modern Working Practices in 2016, which provided the basis for some of the reforms included in the Employment Rights Bill.

Following his appointment, Taylor said: "The agency has a vital job in strengthening labour market compliance and enforcement. This is essential to provide workers with protection and employers with a supportive and level playing field on which to invest and grow."

Meanwhile, recruitment for the FWA's first CEO began last month, with applications closing on 30 November.

How will the FWA work?

The FWA will bring together the work of the Employment Agency Standards Inspectorate, HMRC's National Minimum Wage Enforcement Team and the Gangmasters and Labour Abuse Authority into one place to enforce workforce rights, as well as some new powers. The Secretary of State will have the power to bring in new regulations to expand the remit of the state enforcement functions to include other employment legislation.

Overall, the FWA will have powers to investigate and take action against businesses that do not comply with the law. Powers include to inspect workplaces and relevant documents; issue penalties; bring civil proceedings; enforcement in relation to labour market criminal offences; and recover enforcement costs.

The FWA will be advised by a board made up of businesses, trade unions, and independent experts. To remain accountable, the agency will produce an annual report and an enforcement strategy every three years to be scrutinised by Parliament.  

The Department for Business and Trade stated:

"Once in place, the FWA will be a strong, recognisable single brand so workers know where to go for help. The FWA will take a balanced approach to upholding workers' rights. The FWA will provide better support to businesses on how to comply with the law and will take tough action against rogue employers who exploit their workers."

The PCA's view

Paul Newsham, CEO of the Payroll Compliance Authority, says: "The PCA is favour of all steps towards greater protection for workers and compliant businesses. Having the Fair Work Agency as a single enforcement body will also make it simpler for workers and businesses to have one place to turn to, rather than the confusing system currently in place.

"With regulation of umbrella companies in the pipeline for 2027, to be overseen by the FWA, we are keenly following developments of how the agency is being set up and its growing remit.

"Where 2025 has been a year of consultations and draft legislation, 2026 will be a pivotal year in which we start to see the impact of the FWA, a legislative shift around liability for PAYE and NIC, and the pathway towards sector regulation for umbrella companies."