Fair Work Agency – Employment Rights Bill

The Fair Work Agency, which will be established by the Employment Rights Bill (the “Bill”) marks a major reform in how the UK enforces employment rights. By creating a single enforcement body—the Fair Work Agency (FWA)—the Bill aims to streamline oversight. 

While many details remain undecided, the FWA promises to shift the balance of power. Likely favouring proactive, large-scale investigations over individual tribunal claims.

The Current Law:

Currently, employment rights are enforced in a number of ways:

• Individual Employment Tribunal (ET) claims.  The most common form of employment rights enforcement. An individual, or group of individuals bring a claim for employment rights at the ET.
• Gangmasters and Labour Abuse Authority (GLAA).  The role of the GLAA is to enforce rights for vulnerable workers in specifically designated sectors.
• HMRC.  While predominantly concerned with tax, HMRC also enforces the NMW.
• Employment Agencies Standards Inspectorate (EAS).  The EAS are able to investigate & enforce rights under the Conduct Regs.
• Director of Labour Market Enforcement (LME).  The agency is currently tasked with bringing together the various enforcement bodies.

The Change:

• The Employment Rights Bill (the Bill) will establish the Fair Work Agency (FWA) and abolish both the LME & GLAA.
• Enforcement of holiday pay rights and SSP will now be under the remit of the FWA.
• The FWA will have increased powers of investigation and enforcement.
• The FWA will have the powers to issue civil penalties and compensation orders.

What’s Missing?

There are areas that are missing from the Fair Work Agency Employment Rights Bill.

FWA to Operate Under Department of Business & Trade

The FWA will be an executive agency of the Department of Business & Trade. As such, the Secretary of State will have ongoing scope to alter its remit and powers.

Scope and Powers Remain Flexible

The Bill is now at the “report” stage but much of the detail will come via secondary legislation. Accordingly, there are still a lot of details we are waiting for.  We should view the FWA’s scope and powers as fluid rather than set in stone.

Implementation Timeline and Enforcement Details Still Unclear

Timescales for implementation and structure, including procedures for, and levels of enforcement, penalties and orders still to be determined.

Action Points:

With much still to be determined, including the date on which the FWA will formally commence, businesses do not need to change everything they do immediately. However, this is an opportunity to review and then amend their employment documentation and practices. 

The following process is recommended:

1. Audit your employment documentation and practices.
2. Amend your documentation/ practices following the audit.                       
3. Implement processes so your business can respond to large scale enquiries, in addition to the more usual individual ET claims.

Focus Points:

The FWA’s Enforcement Process and Regime: 

Amendments tabled w/c 3 March 2025 point to a two-pronged enforcement regime. 

The first element suggests a regime similar to the one that currently exists for NMW enforcement. Whereby the FWA can investigate potential breaches and issue enforcement notices. Employers would then be able to appeal a notice where it is disputed. 

The second element, if enacted, grants the FWA powers that will alter employment enforcement significantly. Under the Bill, the FWA will be able to bring tribunal claims, with or without the claimant, provide legal advice, including representation and to have its costs added to the claimant’s in circumstances where costs are recoverable.  

These new powers, if resourced adequately, will render the FWA a body with significant powers. Employers will no longer be able to rely on a workers reticence to make a claim to avoid enforcement.

Scope of FWA:  

We know that holiday pay is within the FWA’s purview. This is a major change to how holiday pay will be enforced. 

Currently individual claims must be made. Under the changes the FWA will be able to investigate the holiday pay compliance of an entire workforce. Accordingly, representation for a holiday pay enquiry and in any subsequent appeal to the ET will need to be seriously considered.