Last reviewed: 19.11.2025
What is the current situation?
Enforcement of the rules relating to minimum wage, holiday pay, statutory sick pay, agency workers, licensing standards for gangmasters and parts of the Modern Slavery Act 2015, is undertaken currently by a mixture of individuals bringing claims and different state enforcement bodies (such as HMRC, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority).
So what’s changing and when?
A new Fair Work Agency (FWA) will be introduced amalgamating the above various enforcement bodies into a new single enforcement body with extended reach. The FWA will also introduce the state enforcement of holiday pay for the first time.
The FWA will have wide-ranging powers aimed at strengthening enforcement of certain workplace rights. Briefly summarised, it will investigate and take action against businesses that do not comply with the law.
The FWA’s powers will include being able to inspect workplaces and to require employers to produce evidence to demonstrate compliance with relevant employment laws, as well as the power to issue Notices of Underpayment and penalties in relation to the national minimum wage and holiday pay.
Notably, the FWA will be able to bring tribunal claims on behalf of workers – even if the worker chooses not to. The FWA will also have the power to provide legal assistance for employment-related proceedings, and to recover enforcement costs from employers against whom enforcement action has been taken for non-compliance.
The FWA will also be able to enforce failure to comply with a new holiday record keeping obligation on employers to be introduced under the Employment Rights Bill. The requirement is to keep for six years records to demonstrate compliance with workers’ rights under the Working Time Regulations to holiday, holiday pay and pay in lieu of outstanding holiday on termination. The Bill provides that records may be created, maintained and kept in such manner and format as the employer reasonably thinks fit; currently, there is no further detail. Failure to comply will amount to an offence (punishable by a fine). It is currently unclear when this new holiday record keeping obligation will come into force. The FWA is expected to be operational by April 2026, but it is unclear when its enforcement powers will come into force.
What you need to do
The timing of some of these actions will depend on when the detail of the new laws is finalised and when the changes come into force. However, you can start to plan now:
- Review your policies and practices on minimum wage, sick pay and holidays.
- Ensure good record-keeping in relation to national minimum wage, sick pay and holidays. Key personnel including managers need to be aware that, once the FWA is fully operational, risks of non-compliance with the rules relating to these aspects of employment law are likely to increase.
- Reduce the risk of complaints progressing to the FWA by taking active steps to resolve grievances internally and encouraging staff feedback. Ensure your grievance process is regularly reviewed and that managers follow it. You could consider setting up surveys for staff feedback (see our HR and Employment Law FAQs - September 2025).
How we can help
- Sign up to our updates as the legal changes come in, so you can stay compliant and up to date.
- We have detailed HR and employment law guidance, template policies and letters on our website in the HR & Legal Resources section, which will be maintained as the changes come into force.
- Our team of employment lawyers is happy to help if you’ve got questions or need advice. And if you need hands-on support with any projects as you prepare for the changes, our HR and legal consultants can work with you to get the right steps in place and stay compliant.
- Use our ERB enquiry line ([email protected]) for real-time access to legal specialists when you need quick answers about the Employment Rights Bill.
- Ask about our Right track review (coming soon): A focused, in-business audit with clear, practical steps to keep you compliant.
- You can also shape future policy. We speak regularly with Government and feed into consultations, using input from businesses like yours.
Ongoing employment law and HR support
- For longer-term support, our retained service includes:
- Direct access to employment law experts.
- Regularly updated HR policies and templates.
- Advice for day-to-day issues and bigger picture planning.
- The chance to help shape Government policy.
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