The Fair Work Agency is Coming – What it Actually Means for Employers

The Fair Work Agency (FWA) is a new government body expected to come into play from 2026 as part of wider employment reform.

A key shift employers need to understand is this: workers will not always need to bring claims themselves. The Agency will have the ability to act proactively.

Enforcement officers are expected to have broad inspection powers, including the ability to enter workplaces, review records and require information. This significantly increases exposure for employers, particularly SMEs who may not have robust systems in place.

The Agency will also have powers to:

• Issue notices of underpayment for areas such as National Minimum Wage, Statutory Sick Pay and holiday pay
• Require payment of arrears within a short timeframe (expected to be around 28 days)
• Impose financial penalties of up to 200% of the underpayment (capped at £20,000 per worker), payable to the Secretary of State
• Recover enforcement costs from non-compliant employers (subject to further regulations)

In practical terms, this means employers could face repayment demands, penalties and additional costs without an employee ever bringing a tribunal claim.

On paper, it’s about improving workplace standards. In practice, it’s going to raise expectations on how employers run their businesses day to day.

This is about being able to prove what you’re doing is consistent and compliant.

What the Fair Work Agency will actually do

The FWA is being set up to:

• Promote fair and consistent workplace practices
• Provide guidance on how work should be structured and managed
• Bring together oversight of areas like pay, working conditions and worker rights

It’s not being positioned as a traditional enforcement body, but inspections and intervention will form part of how standards are assessed, particularly where there are complaints or concerns.

What inspections are likely to look like

If your business is reviewed, expect a focus on evidence, not intention.

That means being able to show:

• Clear absence and holiday records
• Consistent application of SSP
• Accurate payroll data
• A reliable audit trail
• Written risk assessments
• Up-to-date policies
• Evidence that managers have been trained

This isn’t about having policies in place. It’s about whether they are actually being followed.

You will need to show:

• What decisions were made
• Why they were made
• That people were treated consistently

Inspections may not always be scheduled in advance, so this needs to be your standard, not something you pull together at the last minute.

High-risk areas for employers

The same issues come up repeatedly, and this is where exposure sits:

• Misuse of zero-hours contracts
• Misclassification of workers
• Inconsistent treatment between employees
• Poor or missing documentation
• No clear reporting or escalation of issues

If decisions aren’t recorded or processes vary depending on the manager, that’s where problems start.

Subcontracting – where businesses often get caught out

If you use subcontractors or third parties, you need a clear audit trail.

You should be able to show:

• Who is carrying out the work
• On what basis
• How they are being treated
• What checks you’ve carried out

If something goes wrong, it won’t be enough to say they aren’t your employees.

You need to demonstrate:

• Fairness
• Compliance
• That you’ve taken reasonable steps to oversee what’s happening

What employers will be expected to show

This is where expectations are heading. Employers will need to evidence:

Consistency and transparency

• Clear reasoning behind decisions
• Consistent treatment across the workforce
• Documented processes, not informal practice

A safe working environment

• Practical safety measures in place
• Clear responsibilities
• Up-to-date risk assessments

Training that is actually delivered

• Harassment prevention
• Equality and inclusion
• Manager training
• Records showing this has been completed

Proper processes

• Disciplinary and grievance procedures aligned with ACAS
• Managers trained to apply them
• Outcomes properly documented

Pay and working time accuracy

• Correct holiday pay
• Proper handling of overtime, breaks and rest
• Reliable systems for recording time worked
• Transparency in how pay is calculated

Contracts and policies

• Up-to-date wording
• Clear and fair terms
• Alignment with current expectations

What employers should be doing now

This isn’t something to leave until it’s in force.

Start with:

• A proper audit of your current practices
• Fixing gaps in documentation
• Training managers so they apply processes consistently
• Checking payroll and record-keeping
• Making sure your processes would stand up if reviewed

How HPC can help

At HPC, we work with businesses to make this practical.

We help you:

• Identify risk areas
• Get your policies and processes in order
• Train managers so they know what they’re doing
• Build systems that hold up under scrutiny
• Support you through inspections, complaints or claims

Final point

This isn’t about creating extra admin for the sake of it. It’s about being able to show that your business is run properly. If your processes are clear, consistent and documented, you’ll be in a strong position. If they’re not, this is where it gets exposed.

To find out more information or to discuss preparation for the Fair Work Agency, get in contact with our team of experts.

T: 0330 107 1037

E: contact@hpc.uk.com

LinkedIn: High Performance Consultancy