The Fair Work Agency

The Fair Work Agency, a new enforcement body for certain employment rights, was established on 7 April 2026.

The Fair Work Agency will consolidate a number of existing enforcement functions, including those relating to the national minimum wage, statutory sick pay, employment tribunal penalties, labour exploitation and modern slavery, and the regulation of employment agencies’ rules. It will also introduce, for the first time, an ability to fine employers who underpay holiday pay.

The Fair Work Agency will be able to:

• Enforce a failure to comply with the new obligation to keep adequate records of holiday pay.
• Enforce failure to pay certain statutory payments to workers, including holiday pay and statutory sick pay. Under the existing minimum wage enforcement regime, the Agency may require you to pay any amount you owe the individual within 28 days. It can impose a penalty of 200% of the sum owed (capped at £20,000 per worker. This will be reduced to 100% if paid within 14 days). This will have major implications for employers who get holiday pay wrong across a workforce.
• Bring Employment Tribunal proceedings on behalf of a worker.
• Provide legal assistance in employment-related proceedings, including holiday pay claims.
• Recover their own enforcement costs from employers who are not compliant. This is a major new addition that will increase employers’ non-compliance costs.
• Enter homes with a warrant to obtain documents and check computers.

Employers are also under a new duty to keep records showing that they have complied with the holiday entitlement and pay rules. The key points are:

• Records must be kept for six years, even after the employee has left.
• The Fair Work Agency has the power to inspect those records.
• Failing to keep adequate records is a criminal offence punishable by a fine.

What should you be doing now?

Holiday entitlement can be complex, and it is easy to make mistakes. It is crucial for employers to get their holiday record-keeping in order. There is no prescribed format, but employers will need to be able to show:

• How much statutory holiday each person has taken.
• That holiday pay has been correctly calculated.
• That employees have been paid what they are owed.
• Make sure you haven’t misclassified anyone as self-employed.

We recommend auditing payment policies and systems to resolve potential underpayment issues and ensure your HR processes are accurate and transparent to minimise the risk of exposure.

Contact our employment law solicitors today

If you require further support, we would be happy to discuss the changes in detail with you and explore how Ashtons Legal can assist your business.

If you have any questions or concerns about the updates provided above, please contact a member of our Employment Law team. You can use our online enquiry form or call 0330 191 5713.