The Fair Work Agency Is Coming: What Employers Need to Understand About the New Enforcement Body

On the 19th of March 2026 — just two weeks before the most significant employment law changes in a generation came into force — the government published its final list, naming and shaming employers who had breached National Minimum Wage rules under the old enforcement regime.

389 employers named. £7.3 million in arrears. £12.6 million in fines.

Most weren’t rogue operators. They were businesses caught on technical errors: deductions from wages that tipped workers below the minimum, unpaid time spent on security checks and wrong apprenticeship rates. The kind of payroll mistakes that slip through when systems haven’t kept pace with the rules.

From the 7th of April 2026, those same kinds of errors and a whole new category of them, are being enforced by a body with significantly more reach. The Fair Work Agency (FWA) is here, and we’re looking into what that means for your business and what the April 2026 statutory pay changes actually require you to change right now.

What is the Fair Work Agency?

The Fair Work Agency is a new single state enforcement body for employment rights in England, Scotland and Wales. It was established under the Employment Rights Act 2025 (Royal Assent: 18 December 2025) and formally launched on the 7th of April 2026.

It sits under the Department for Business and Trade, with Matthew Taylor — author of the 2017 Taylor Review of Modern Working Practices and current CEO of the NHS Confederation — as its first Chair.

The FWA is not a rebrand. It consolidates four existing bodies into one, and takes on two enforcement functions that have never existed at state level before.

Who it replaces

Body absorbed	Former role
HMRC National Minimum Wage enforcement team	Investigated and enforced NMW underpayments
Gangmasters and Labour Abuse Authority (GLAA)	Licensed gangmasters; tackled labour exploitation and modern slavery
Employment Agency Standards Inspectorate (EASI)	Regulated employment agencies and agency worker protections
Director of Labour Market Enforcement	Strategic coordination of labour market enforcement

What it does that nothing did before

This is the part that changes the risk calculation for employers. The FWA has taken on state enforcement of:

• Holiday pay — previously, workers had to bring their own tribunal claims if an employer underpaid. Now the FWA can investigate and pursue employers directly.
• Statutory Sick Pay (SSP) — same situation. Workers no longer need to take you to a tribunal for SSP arrears. The FWA can come to you.

That shift from worker-initiated claims to state-led enforcement is the structural change that makes April 2026 different from every previous round of employment law reform.

What powers does the Fair Work Agency actually have?

The FWA launches with over 550 inspectors and a set of powers that go well beyond what employers have dealt with before.

Proactive, unannounced inspections

The FWA does not need a worker complaint to open an investigation. It can inspect your workplace and payroll records proactively, without warning. That’s a significant change from the HMRC NMW model, which was largely complaint-driven.

Financial penalties with real bite

If the FWA finds an underpayment, the penalty structure works like this:

• You’ll receive an underpayment notice, payable within 28 days.
• The standard penalty is 200% of the underpayment, capped at £20,000 per worker.
• Pay within 14 days and the penalty drops to 100%.
• The FWA also recovers its enforcement costs from you.
• Non-compliant employers are publicly named on a government list.

To put that in context: an employer who underpays 10 workers by £1,000 each is looking at a potential £20,000 penalty on top of the £10,000 in arrears — before enforcement costs.

A six-year lookback

The FWA can review your payroll and compliance records going back up to six years. This is not about future compliance only. Errors made under the old rules — historical SSP miscalculations, holiday pay underpayments for irregular workers, NMW edge cases — are all in scope.

This is also why a new record-keeping obligation that came in on the 6th of April 2026 matters more than it might seem: employers are now legally required to retain annual leave records (leave taken, pay received, and any payment in lieu on termination) for all workers, including those on irregular or part-time hours. Six years of clean records is your best defence in an FWA investigation.

Power to bring tribunal claims on behalf of workers

Workers who couldn’t afford to, or chose not to, bring a tribunal claim are no longer the limit of your exposure. The FWA can bring those claims for them. It can also provide workers with legal advice and assistance.

Criminal enforcement

For the most serious labour market offences, including non-compliance with enforcement orders, the FWA has criminal enforcement powers with PACE investigatory authority (in England and Wales) and the ability to pursue fines and, in some cases, imprisonment.

The April 2026 statutory pay changes: what’s actually changing

The FWA’s new SSP and holiday pay enforcement powers land at exactly the same moment as the most significant overhaul of SSP in years — and meaningful changes to every family-related statutory pay rate. These aren’t coincidental. They’re part of the same policy package, and understanding one without the other misses the point.

Statutory Sick Pay: the biggest reform in a generation

Four changes hit simultaneously on the 6th of April 2026. Each one, on its own, would be notable. Together, they fundamentally change how SSP works.

	Before the 6th of April 2026	From the 6th of April 2026
Weekly rate	£118.75	£123.25
When it starts	Day 4 of sickness — first 3 days are unpaid ‘waiting days’	Day 1 — even a single day off sick triggers liability
Earnings threshold (LEL)	Employees must earn £125+/week to qualify	Abolished — all employees qualify regardless of earnings
How it’s calculated	Flat rate for all qualifying employees	Lower of £123.25/week or 80% of average weekly earnings (calculated over the 8 weeks before absence)

The removal of the Lower Earnings Limit is where the scale of this change becomes clear. The government estimates that up to 1.3 million additional workers now qualify for SSP — predominantly part-time staff, zero-hours workers, and casual employees who previously earned below the threshold. If you employ people in these categories, you need to audit your workforce now to understand who’s newly in scope and what the cost looks like.

The new 80% calculation also introduces complexity for variable-hours workers. Higher earners will receive the flat £123.25/week. Lower earners — including many of those newly eligible workers — will receive 80% of what they actually earned over the previous eight weeks. You can’t apply a one-size-fits-all figure anymore.

The removal of waiting days and the Lower Earnings Limit applies to anyone currently absent on the 6th of April. If an employee was already off sick before the 6th of April and was still serving their three waiting days, or if they were previously ineligible because they earned below the LEL, they become entitled to SSP from the 6th of April onward . This change isn’t just for new illnesses—it applies to all active sickness periods.

Statutory family pay rates: increases across the board

All family-related statutory pay rates increased in early April. SMP from 5 April; all other payments from the 6th of April 2026.

Payment	2025/26 rate	From April 2026
Statutory Maternity Pay (SMP) — weeks 7–39	£187.18/week	£194.32/week
Statutory Paternity Pay (SPP)	£187.18/week	£194.32/week
Statutory Shared Parental Pay (ShPP)	£187.18/week	£194.32/week
Statutory Adoption Pay (SAP) — weeks 7–39	£187.18/week	£194.32/week
Statutory Parental Bereavement Pay (SPBP)	£187.18/week	£194.32/week
Statutory Neonatal Care Pay (SNCP)	£187.18/week	£194.32/week

One important distinction: The Lower Earnings Limit for family pay has not been abolished. Unlike SSP, where the LEL is gone entirely, the LEL for SMP, SPP, and other family payments has simply been uprated from £125/week to £129/week. Employees still need to meet this threshold to qualify. This is a common point of confusion — get it right before it trips up a payroll run.

HMRC recovery rates remain unchanged: 92% of statutory family pay is recoverable if your total Class 1 NI liability exceeds £45,000; 109% if it doesn’t.

Day-one leave rights: what changed and what didn’t

Paternity leave is now a day-one right. The previous 26-week service requirement has been removed for babies with an Expected Week of Childbirth on or after 5 April 2026, born on or after the 6th of April, or placed for adoption on or after the 6th of April.

Around 32,000 additional fathers and partners per year gain immediate access to paternity leave as a result.

But there’s a nuance worth getting right, because it’s misreported constantly: paternity leave is a day-one right. Paternity pay is not. The 26-week service requirement for Statutory Paternity Pay is still in place. A new starter can take up to two weeks of paternity leave from day one — but if they haven’t been with you for 26 weeks, they won’t receive SPP. They can only receive pay if you offer it contractually.

Also fixed from the 6th of April: the previous rule that meant an employee who took Shared Parental Leave forfeited their right to paternity leave. That anomaly is gone. Paternity leave can now be taken after a period of Shared Parental Leave.

Unpaid parental leave is also now a day-one right. The previous one-year service requirement has been removed. The entitlement itself is unchanged — 18 weeks per child (for children under 18), with a maximum of four weeks per child per year,but around 1.5 million additional parents now have access from the day they start work. As the name makes clear, this leave is unpaid. No statutory payment is attached.

Brand new right: Bereaved Partner’s Paternity Leave

This is the change that most employers haven’t planned for, because it’s new — not a reform of something that existed before.

The Bereaved Partner’s Paternity Leave Regulations 2026 (SI 2026/237), which came into force on the 6th of April 2026, create an entirely new statutory entitlement. Where a child’s mother or primary adopter dies during or after childbirth — within the child’s first year of life — the father or partner is entitled to take up to 52 weeks of leave to care for that child.

Key things to know:

• Day-one right — no qualifying service period applies.
• Unpaid at statutory level — employers are free to offer contractual pay, but there’s no statutory rate.
• Employment protections apply throughout the leave, similar to other forms of family leave.
• A “Keeping in Touch” provision allows the employee to work up to 10 days during leave without ending it.
• Extended redundancy protection applies if leave is six weeks or longer.

Most employers will have no existing policy that covers this. A standalone Bereaved Partner’s Paternity Leave policy is now a legal necessity, not optional.

What the FWA means for employers in practice

Here’s the honest picture: the FWA’s immediate enforcement focus from April 2026 is National Minimum Wage, agency worker rights, and labour exploitation. Full SSP and holiday pay enforcement is expected to build out from 2027 as the agency scales up.

But that phased timeline doesn’t mean you have time to wait. The records obligation starts now — six years of clean annual leave records is a legal requirement from the 6th of April. The SSP calculation changes are live immediately. And the FWA’s six-year lookback means any audit that opens in 2027 will be looking at your 2021 payroll too.

The name-and-shame mechanism is also worth taking seriously as an employer brand risk, not just a financial one. The March 2026 naming list contained recognisable household names — not because they were deliberately underpaying workers, but because technical payroll errors had gone uncaught. That’s the category most businesses fall into.

One more thing that’s easy to overlook in April: the maximum protective award for failure to collectively consult on redundancies doubles from 90 to 180 days’ pay per affected employee from the 6th of April 2026. A further 25% uplift can apply where the fire-and-rehire Code of Practice has been breached. If you have any restructuring planned, review the consultation requirements now.

Your April 2026 compliance checklist

Most cloud-based payroll solutions, including Employment Hero, apply April rate changes automatically or via a year-end update, so you may not need to touch individual settings manually. If you’re on an older or self-managed system, you’ll need to apply these yourself. Either way, confirm your payroll is correctly handling all of the following before your next pay run:

Payroll and systems

• SSP paid from day one with no waiting days applied.
• SSP calculated as the lower of £123.25/week or 80% of average weekly earnings (eight-week average) — not a flat rate for all.
•  All employees eligible for SSP regardless of earnings — the LEL no longer applies.
• Family leave pay rates updated to £194.32/week (SMP from 5 April; all other family payments from 6 April).
• NMW/NLW rates updated from 1 April: 21+ = £12.71/hr; 18–20 = £10.85/hr; 16–17 and apprentices = £8.00/hr.
• Zero-hours, part-time, and casual workers reviewed for new SSP eligibility — model the cost impact where needed.

HR policies and documentation

• Remove all references to SSP waiting days from your absence and sickness policies.
• Update your paternity leave policy — remove the 26-week service requirement for leave eligibility (pay eligibility is unchanged).
• Update your unpaid parental leave policy — remove the one-year service requirement.
• Create a Bereaved Partner’s Paternity Leave policy (this is a brand-new statutory right from the 6th of April).
• Review any enhanced contractual pay provisions to make sure they still work as intended now the statutory floor has moved.
• Update employee handbooks, contracts, and offer letters to reflect day-one rights for new starters.

Record-keeping

• Put in place six-year retention of annual leave records for all workers — covering leave taken, pay received, and any payment in lieu on termination. This applies to irregular and part-time staff, not just permanent employees.
• Make sure payroll and HR records are organised and audit-ready — an FWA inspection won’t come with weeks of preparation time.

FWA compliance audit

• Audit NMW/NLW compliance across all roles — pay particular attention to salary sacrifice deductions, uniform or equipment deductions, unpaid time in training or security checks, and apprenticeship rates.
• Review holiday pay calculations for part-year workers, irregular hours workers, and casual staff — this is the area most likely to trigger FWA enforcement once SSP and holiday pay powers are fully active.
• Train line managers on day-one rights so new starters receive correct treatment from their first day, not after their probation ends.

How Employment Hero helps

Managing compliance across payroll, HR policies, and leave entitlements manually — across a workforce that may include permanent, part-time, zero-hours, and casual staff — is where errors happen.

On payroll: Employment Hero’s payroll software is built for UK compliance, with automatic updates when statutory rates change. The new SSP calculation, updated family pay rates, and April NMW increases are already reflected. You’re not relying on a manual update to a spreadsheet.

On HR policies: Our template library and policy management tools make it straightforward to update your paternity, parental leave, and sickness absence policies and push them out to employees for acknowledgement — with a full audit trail.

On HR advisory: If you’re not certain your current setup is FWA-ready, our HR Advisory team can review your payroll processes, leave records, and employment documentation and flag the gaps before an inspector does.