How the Employment Rights Act is changing the enforcement of certain employment-related laws

Review your policies and record keeping relating to national minimum wage, sick pay and holiday

Situation before reforms under the Employment Rights Act 2025

Enforcement of the statutory rules relating to minimum wage, holiday pay, sick pay, agency workers, licensing standards for gangmasters and parts of the Modern Slavery Act 2015, was undertaken 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 changed/changing and when?

A new Fair Work Agency (FWA) was established on 7 April 2026 which amalgamates various of the above enforcement bodies into a new single enforcement body with extended reach, and introduces state enforcement of holiday entitlements and pay for the first time.

The FWA has wide-ranging powers aimed at strengthening enforcement of the relevant workplace rights. Briefly summarised, it will investigate and take action against businesses that do not comply with the law. 

The FWA’s powers 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. 

Notably, the FWA has the power to bring tribunal claims on behalf of workers – even if the worker chooses not to. The FWA can also provide legal assistance for employment-related proceedings, and recover enforcement costs from employers against whom enforcement action has been taken for non-compliance.

According to the Government’s , during 2026/27, minimum wage enforcement will continue to be delivered by HMRC under a contracting arrangement with the FWA. This will ensure continuity of service while the FWA prepares for the full transfer of minimum wage functions in April 2027.

The position as regards timing of the FWA enforcing rules relating to statutory sick pay is currently unclear.

The Government’s indicates that the FWA will commence holiday pay enforcement in 2027. 

From 6 April 2026, a new holiday record keeping obligation came into force under the Employment Rights Act, which will be enforceable by the FWA. The new requirement under the Act is for employers to keep for six years records to demonstrate their compliance with workers’ rights under the Working Time Regulations to holiday, holiday pay and pay in lieu of outstanding holiday on termination.

The Act 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).

What you need to do

• Review your policies and practices on minimum wage, sick pay and holidays. Key personnel including managers need to be aware that risks of non-compliance with the rules relating to these aspects of employment law are likely to increase.
• Ensure good record-keeping in relation to national minimum wage, sick pay and holidays.
• 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.

How Bhayani Law can help

Bhayani Law can support you by reviewing your pay, sickness and holiday practices for compliance, strengthening your record-keeping processes, and updating policies ahead of the FWA’s introduction. We also provide practical guidance and manager training to help reduce enforcement risk and resolve workplace issues before they escalate.

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You will receive updates on legal developments, ensuring you remain compliant and informed.

We offer detailed HR and employment law resources, including template policies and letters on our Watertight HR Hub.

If you need advice, your dedicated advisor can assist with policy reviews, drafting, and updates.

Our HR and legal team can also deliver menopause awareness training for managers and teams, conduct diversity audits, carry out pay gap analysis, help design effective action plans, and provide unconscious bias training to improve recruitment and retention practices.

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You don’t need to navigate these changes alone. Whether you need short-term input or long-term HR and legal support, we offer tailored solutions to fit your organisation’s needs.