What is the current situation?

Enforcement of rules relating to the national minimum wage, holiday pay, statutory sick pay, agency workers, gangmaster licensing standards and certain provisions of the Modern Slavery Act 2015 is currently split between individual claims and several different state enforcement bodies. These include 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 established, bringing together these existing enforcement bodies into a single organisation with wider powers and reach. For the first time, the FWA will also take on responsibility for state enforcement of holiday pay.

The FWA will have extensive powers designed to strengthen compliance with workplace rights. In summary, it will be able to investigate non-compliant businesses and take enforcement action where breaches are identified.

Its powers will include the ability to inspect workplaces, require employers to provide evidence of compliance with employment law, and issue Notices of Underpayment and financial penalties in relation to the national minimum wage and holiday pay.

Importantly, the FWA will be able to bring employment tribunal claims on behalf of workers, even where the worker does not wish to pursue a claim themselves. It will also have the power to provide legal assistance in employment-related proceedings and to recover enforcement costs from employers found to be non-compliant.

The FWA will also be responsible for enforcing a new holiday record-keeping duty introduced by the Employment Rights Act. Employers will be required to keep records for six years demonstrating compliance with workers’ rights to holiday, holiday pay and payment in lieu of untaken holiday on termination under the Working Time Regulations. Records may be kept in any reasonable format chosen by the employer. Failure to comply will be a criminal offence punishable by a fine. The start date for this obligation has not yet been confirmed.

The FWA is expected to be operational by April 2026, although it remains unclear when all of its enforcement powers will come into force.

What you need to do

The precise timing of these actions will depend on when the final details of the legislation are confirmed. However, employers can begin preparing now by:

• Reviewing policies and practices relating to minimum wage, sick pay and holidays

• Ensuring robust record-keeping for pay, sickness absence and holiday entitlements

• Making sure managers understand that enforcement risks are likely to increase once the FWA is fully operational

• Reducing the likelihood of complaints escalating by dealing with concerns early through effective internal grievance processes

• Regularly reviewing grievance procedures and ensuring managers follow them consistently

• Encouraging staff feedback, for example through surveys or engagement initiatives

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.

Already working with Bhayani Law?

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.

New to Bhayani Law?

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.