The UK’s new employment law enforcement body is actively encouraging businesses to report their own compliance failures before inspectors find them, its chief executive told Employment Hero’s Inside the Workroom podcast.
“Everybody makes mistakes. If you find a problem, put it right and let us know,” said Lisa Pinney MBE, Chief Executive of the Fair Work Agency, speaking to Kevin Fitzgerald, UK Managing Director of Employment Hero.
“We want to work with legitimate businesses that want to do the right thing. We’ll work with you.”
Since the Fair Work Agency launched on 7 April 2026, small business owners and leaders across the UK have been keen to understand how it’ll enforce Employment Rights Act laws – and how small businesses can keep up with the new compliance demands that come with them.
Recent YouGov data commissioned by Employment Hero found that 53% of small and medium-sized business leaders are worried about unintentionally breaking new employment laws. A separate wave of the same research found that 44% have already frozen or slowed hiring, and one in four is increasing its use of contractors and freelancers – in part to avoid the statutory obligations that come with permanent employment. For many, the question is how the agency will work in practice – and what SMEs can do to be on the right side of it.
What the Fair Work Agency Is and What It Covers
The Fair Work Agency is the Government’s new employment law enforcement body, launched on 7 April 2026 as an executive agency under the Department for Business and Trade. Consolidating a number of former government enforcement functions, it sits at the centre of the Employment Rights Act’s enforcement architecture. For the roughly five million SMEs operating in the UK, it’s the most significant new compliance authority in recent history.
The agency has been built in stages. At launch, it absorbed responsibilities for serious labour exploitation and modern slavery enforcement, gangmaster licensing, and employment agency regulation. Looking ahead, National Minimum Wage enforcement is transferring from HMRC, operating under a transitional arrangement this year before moving fully to the agency in April 2027 – with holiday pay enforcement set to follow.
“Holiday pay, we believe, will be at the front of that line,” Lisa confirmed when asked about the Fair Work Agency’s areas of focus.
“It’s very important to us that we’re not just the sum of our parts. We’re really working to build the elements, the integration, the capability that will increase our reach, increase our impact.”
Pointing to businesses to existing guidance, Lisa added:
“[We] really encourage people to look at the Department of Business and Trade Employment Hub – and also look for further information and guidance on our Fair Work Agency website and social media channels, especially as new powers start to come into enforcement. You can sign up for webinars and other engagements as well.”
But for businesses that do fall short – or simply don’t know whether they have – what does it look like when the Fair Work Agency gets involved?
How the Fair Work Agency Investigates Employers
For most businesses, the first contact from the Fair Work Agency will be a letter, not a visit. Lisa explained what that process typically entails:
“In most cases, it’ll probably start with a letter informing employers either that we’re going to be in the region shortly, perhaps providing advice on what sort of proactive checks and actions employers can take – and generally giving some time for them to do that and to self-report any problems or outcomes of that.”
Where businesses do come forward, the agency works with them. Those that don’t, and are subsequently found to be significantly non-compliant, face follow-up inspections and enforcement action. “That’s generally the approach for things like National Minimum Wage, employment agency compliance – and it’s likely to be the case for holiday pay and statutory sick pay enforcement too,” she said.
“Nobody knows your business better than you as a business owner”
Lisa Pinney, Fair Work Agency CEO
Cases involving serious labour exploitation or modern slavery work differently. They arrive via referrals from partners, charities, businesses and individuals, are assessed alongside wider intelligence gathered by the agency, and are more likely to result in an enforcement-led visit from the outset.
Beyond reactive cases, the agency also uses data to get ahead of problems. “We work both reactively and proactively across our remit,” Lisa said. “We also work with our regulated sectors such as agriculture and food production and employment agencies – and we also sometimes take a targeted regional focus, very much at the moment used for national minimum wage and related action.”
What UK Businesses Are Getting Wrong on Compliance
According to the CIPD’s Winter 2025/26 Labour Market Outlook, two in five employers expect to hire fewer permanent workers as a direct result of Employment Rights Act reforms. Lisa’s view is that much of the anxiety driving those decisions can be addressed by doing something straightforward: reading the guidance and being honest about what you find.
“A lot of these are things that have been the right things to do for a while – they’ve just got more powers, more teeth,” she said. “There’s a lot of concern around this, but I think a lot of it comes back to the same steps, really.”
She was specific about what those steps are: “Ensure that your policies and procedures are up to date. Make sure that your employees are receiving the pay and conditions they’re entitled to. If you find a problem […] self-report to us. We’ll work with good businesses that want to do the right thing.”
Why Record Keeping Is the Fair Work Agency’s Benchmark
When asked about the single most important action an SME can take this year, Lisa said:
“Do a simple compliance review. Ensure that your people are receiving the pay and conditions they need to – and that you’ve got simple documentation in place, simple records, to be able to demonstrate that. You do need to be able to demonstrate your compliance.”
The standard isn’t the same for a five-person business as it is for a five-hundred-person one, she said. “Records don’t have to be complex. They should be proportionate to the size of your business. Simple and accurate records are key – things like payslips, for example, are a huge step.”
The agency is also building dedicated infrastructure to support that shift. “That includes a new innovation hub which is really looking at how do we improve our digital presence, how do we produce tools to support businesses and workers, how do we modernise our internal ways of working and how do we use AI and other tech to improve our efficiency, impact and delivery,” Lisa said.
On technology, automation and AI, Lisa encouraged businesses to use the tools available to them – but with a caveat the Fair Work Agency applies to its own operations as much as anyone else’s. “We would always recommend that there is a human in the chain. You can’t just give it to the machine – you do need to understand the inputs you’re putting in, and you have to be able to sense check the outputs.”
What Comes Into Force Next and When
The Fair Work Agency’s remit is actively expanding, with several significant Employment Rights Act provisions still to come into force. Holiday pay and Statutory Sick Pay have both been within the Fair Work Agency’s enforcement remit from launch. The new SSP rules – which removed the three-day waiting period and extended eligibility to lower-paid and part-time workers for the first time – came into force on 6 April 2026 and National Minimum Wage enforcement transfers fully from HMRC in April 2027.
Beyond that, the agency’s scope will expand further as the Employment Rights Act continues to roll out: unfair dismissal protections change in January 2027, and zero-hours contract reforms, new shift notice rights and broader collective redundancy consultation obligations are all scheduled for 2027, with dates still to be confirmed.
For SMEs, the practical steps Lisa outlined are simple: do a basic compliance review, check that pay and conditions are right, update policies, and get records in order.
“Nobody knows your business better than you as a business owner,” Lisa said. “It’s for you to decide what’s the most effective and efficient way to pay your people fairly and completely – and to demonstrate that for reviews and inspections.”
Watch the full Inside the Workroom episode below
