Under the current system, most employees and workers must enforce their employment rights by bringing claims in the Employment Tribunal. Only a limited set of rights, such as the National Minimum Wage and some agency worker protections, are enforced by the state. This system is described as fragmented and inefficient, leaving many breaches (including underpayments) unchallenged. 

The Fair Work Agency is intended to address this by bringing existing state enforcement functions into one place, and eventually expanding to cover a wider range of employment rights. 

The FWA will act as a single point of contact for both workers and businesses. Its aims include: 

• Improving efficiency through a unified leadership team and strategy 

• Supporting businesses that want to comply with the law 

• Taking strong action against non-compliant businesses to ensure a level playing field 

Over time, it will take on enforcement of a broader set of employment rights. 

The FWA will be an Executive Agency of the Department for Business and Trade (DBT). It will not have its own legal identity; instead, the Employment Rights Bill gives enforcement functions to the Secretary of State, who will discharge them through the FWA. 

Key elements include:

Functions and Powers 

The Bill brings together existing enforcement functions and adds responsibilities relating to Holiday Pay and Statutory Sick Pay. It also includes a power for the Secretary of State to expand the Agency’s remit to additional employment legislation (with Northern Ireland consent where relevant). 

The Bill abolishes the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement. Their work will continue within the FWA. 

An advisory board will be created, following a social partnership model with equal representation from: 

• businesses 

• trade unions 

• independent experts 

The FWA will have a single, consolidated set of enforcement powers, including: 

• Workplace inspection powers and the ability to require employers to produce documents and evidence 

• A civil penalty regime (based on the National Minimum Wage Act 1998), allowing enforcement officers to issue Notices of Underpayment 

• A civil proceedings power enabling the FWA to bring claims in the Employment Tribunal on behalf of workers, and to provide legal advice/assistance 

• Powers to address labour market criminal offences through Labour Market Enforcement Undertakings and Orders, breach of which can result in fines or imprisonment 

• Power for the Secretary of State to set out cost-recovery mechanisms, allowing the FWA to charge non-compliant employers for enforcement costs 

The scale of enforcement problems is significant: 

• 900,000 workers per year have holiday pay withheld (£2.1bn total, an average of £2,300 each) 

Source: Resolution Foundation — Enforce for Good (2023) 

• 14% of the lowest-paid workers report receiving no paid holiday, six times higher than the highest-paid 

Source: Resolution Foundation — Enforce for Good (2023) 

• 19.4% of workers paid at or around the minimum wage were underpaid in 2024 (around 371,000 employee jobs) 

Source: Low Pay Commission - Compliance and Enforcement of the National Minimum Wage in 2024 

These figures highlight the need for clearer, more accessible enforcement,  particularly important in sectors with complex working patterns, including screen production. 

The Employment Rights Bill lays the foundations for the FWA. Because creating the Agency is complex and requires primary legislation, implementation will take place in phases until at least late 2026  following Royal Assent. The Government will publish further details and timelines in due course.