THE FAIR WORK AGENCY – WHAT YOU NEED TO KNOW
Simon Bliss • April 30, 2026

On 7 April 2026, the Fair Work Agency (“FWA”) was established as an executive agency of the Department for Business and Trade. Its creation marks a significant shift in how worker protections are enforced, by bringing together multiple enforcement functions which were previously exercised by multiple bodies.

What is the FWA?


The FWA brings together enforcement functions previously exercised by multiple bodies. Its remit includes:


  • Employment agency standards enforcement;
  • Pay-related rights, including the National Minimum Wage (“NMW”) and National Living Wage (“NLW”);
  • Gangmaster licensing requirements and license conditions;
  • Protections against serious labour exploitation; and
  • Enforcement of Employment Tribunal penalties.


In practical terms, the FWA has taken over the existing functions of the Employment Agency Standards Inspectorate (EASI) and the Gangmasters and Labour Abuse Authority (GLAA). Full enforcement responsibility for NMW is expected to transfer in April 2027 and, until then, HMRC will continue to enforce NMW under a contracting arrangement with the FWA.


In terms of what lies ahead, the FWA is due to publish its first ‘Statutory Enforcement Strategy’ in April 2027 and its First ‘Statutory Enforcement Annual Report’ at the end of the 2027/2028 financial year.


New enforcement powers: underpayment orders, penalties and record inspection

 

The direction of the FWA is becoming clear: faster repayment to workers, greater financial consequences for non-compliance, and increased visibility of records. Key powers of the FWA include:


  • Underpayment orders: the FWA can require an employer to pay any amount owed to an individual within 28 days.
  • Financial penalties: penalties of up to 200% of the sum owed may be imposed (capped at £20,000 per worker). These may be reduced if payment is made promptly (for example, reduced to 100% where payment is made within 14 days).
  • Record inspection: the FWA can inspect holiday and pay records at any time.


Investigations: information requests and entry to premises

 

The FWA has broad investigatory powers to determine whether to exercise its enforcement functions and to gather evidence of non-compliance. It may require individuals to attend a meeting and answer questions and can compel the provision of information or documents by a specified date.


However, these powers may only be exercised where the FWA holds a reasonable belief that doing so will produce relevant results and is necessary for any “enforcement purpose”, as defined in section 96 of the Employment Rights Act 2025 (“ERA 2025”).


Enforcement officers may also enter premises to inspect records and, where appropriate, seize documents and access systems used to store or process information. Entry must take place at a reasonable time unless delay would frustrate the inspection. A warrant is required to enter a dwelling, reflecting the Government’s intention to retain broadly similar business‑premises powers to the pre‑FWA regime, while affording additional protection to private homes. Powers under section 95 of the ERA 2025 extend to electronic records, and any materials seized may be retained for as long as is necessary.


Notices of underpayment

 

Under section 103 of the ERA 2025, the Secretary of State may issue a notice to a “liable party” that has failed to pay sums due to an underpaid individual under specified labour market legislation. This currently includes the NMW and will, in due course, extend to statutory sick pay (“SSP”) and holiday pay,


Notices will generally require payment within 28 days and may be issued even where payment has since been made, provided no related enforcement proceedings are ongoing. Notices may uncover underpayments arising in the six years prior to the notice (subject to potential regulatory reduction), although - save for certain NMW-related entitlements - they cannot relate to sums due before 18 December 2025. A single notice may cover multiple underpaid individuals.


In addition to arrears, notices will usually impose a civil penalty payable to the Secretary of State. This will be set at 200% of the underpaid sum per individual, subject to a £20,000 maximum and £100 minimum. Payment must be made within 28 days, with potential reductions for early payment.


Employers may appeal to the Employment Tribunal within 28 days, but appeals are tightly circumscribed: challenges to the notice itself are limited to whether sums were due, paid on time, or fell outside the permitted period; challenges to sums or penalties focus on calculation errors or non-compliance. Successful appeals can result in cancellation or rectification of the notice.


Powers Not Yet in Force

 

Power to Bring Employment Tribunal Proceedings


Section 116 of the ERA 2025 will allow the Secretary of State to bring Employment Tribunal proceedings on behalf of a worker where the worker appears unlikely to pursue a claim themselves. Claims would be brought in the worker’s name, with any awards made in the worker’s favour. While the Government has indicated that consent would usually be sought, it may not be required where workers face barriers such as fear of reprisal, language difficulties or lack of awareness. Further guidance is waited on how this power will be used in practice.


Power to Provide Legal Assistance


Section 117 introduces a further novel power enabling the Secretary of State to provide legal assistance, including advice and representation, in civil proceedings related to employment, trade union law or labour relations. The power does not extend to the facilitation of settlements and not an enforcement function. Further detail is awaited in secondary legislation.


Power to Recover Enforcement Costs


Finally, section 143 enables regulations requiring non-compliant parties to pay charges reflecting enforcement costs incurred by the state. Charges may be fixed or time-based and will be paid into the Consolidated Fund. This represents another significant shift in the enforcement landscape, though the practical impact will depend on regulations that have yet to be published.

 

Action You Should Be Taking


The ERA 2025 and the establishment of the FWA are emblematic of a decisive move towards active enforcement. Employers can no longer rely solely on assertions of compliance; they must be able to evidence it.  


Key steps employers can take include:


  • ·Check holiday and SSP compliance:

o  Underpayments can attract penalties of up to 200%. SSP changes took effect from 6 April 2026: SSP is now payable from day one of sickness and the lower earnings limit has been removed. Payroll systems should be audited and updated accordingly.

  • Plan for longer liability periods:

o With most Employment Tribunal time limits extending from three to six months (from around October 2026), retaining HR and payroll records for longer will reduce risk.

  • Adopt an inspection-ready mindset
  • Identify and correct historic or outstanding underpayments where possible, ensure HR and payroll teams are aligned, and prepare to produce records quickly if required
By Bishopgate • October 19, 2026
Definitions Widen The scope of Right to Work (RTW) obligations is expanding significantly. Under the new framework, organisations will be required to consider not only employees, but also subcontractors and other workers engaged within their supply chain. This broadens the responsibility for verifying legal working status and increases the number of individuals who will require RTW checks. Liability Permeates Through the Supply Chain Reflecting the direction taken by the April 2026 Joint Liability provisions, liability for illegal working will no longer sit solely with the direct employer or labour provider. Responsibility can now extend up the labour supply chain, meaning organisations may face enforcement action where illegal working occurs within their workforce ecosystem, even where they are not the direct engager. How Will RTW Changes Affect Contractors? Historically, it was not uncommon for self-employed workers to provide documentation at a later stage, as many engagements sat outside the traditional RTW framework. This approach is unlikely to remain viable under the new regime. Workers should now expect to undergo full RTW verification before commencing work. In many cases, checks may be carried out by multiple parties, including labour providers, umbrella companies, agencies and end clients seeking to protect their own statutory position. As a result, duplicate checks are likely to become commonplace across the supply chain. The changes will also require greater operational discipline. Informal processes, where workers begin work before compliance checks are completed, will present a significant risk. Organisations will need robust onboarding procedures to ensure all workers are fully verified, recorded and authorised before accessing site or commencing work. Under the previous framework, where an umbrella company supplied a worker to a client, liability for an illegal worker would generally rest with the umbrella company. Under the proposed changes, liability may extend beyond the direct engager. While the umbrella company remains responsible for conducting compliant RTW checks, organisations further up the supply chain may also face exposure where due diligence has not been exercised. For example, where a contractor engages a limited company and an individual working under that arrangement is subsequently found not to have the right to work, both the limited company and potentially the contractor may come under scrutiny. Similarly, where a worker provides a substitute and that individual has not undergone appropriate RTW verification, liability may extend through the engagement chain if adequate controls have not been implemented. It is important to note that workers employed directly by one organisation and deployed to a client's site are generally outside the scope of Extended Liability. In such circumstances, the client would not typically inherit liability for RTW failures of the direct employer. A further consideration is the concept of statutory excuse. If an umbrella company has conducted a compliant RTW check, but the receiving organisation has not undertaken its own verification, the umbrella company may have a statutory excuse against penalty while the client may not. This creates a scenario where different parties in the same supply chain face materially different compliance outcomes. Can the Client or Agency Rely on the Umbrella Company's Right to Work Check? No. RTW checks are not transferable and do not provide a statutory excuse to another organisation. Each party seeking protection under the legislation must undertake and retain evidence of its own compliant check. Organisations should therefore review existing processes and ensure they are not relying on checks completed by suppliers, agencies or umbrella companies. What About Impersonation? Impersonation remains a significant compliance risk. It is anticipated that organisations will be expected to take reasonable steps to ensure that the individual presenting for work is the same individual whose RTW status has been verified. Where a different person is found to be working in place of the verified individual, organisations that failed to identify or prevent the substitution may face liability. Digital identity verification, biometric validation and technology-enabled site access controls are expected to play an increasingly important role in mitigating this risk. What Can We Expect to See Going Forward? The introduction of Extended Liability is likely to drive substantially higher levels of due diligence across labour supply chains. Clients, Managed Service Providers (MSPs), agencies and contractors are expected to take a far more active role in verifying RTW compliance, rather than assuming responsibility sits elsewhere in the supply chain. The use of digital identity verification and workforce management technology is also expected to increase as organisations seek to create auditable compliance frameworks and reduce the administrative burden associated with manual checking processes. Greater collaboration between clients and suppliers is also likely as organisations work together to maintain compliance and demonstrate robust governance. How Should You Prepare for Upcoming Changes? Organisations should consider taking the following steps: Map all workforce engagement models to understand where workers are employed, self-employed, supplied via umbrella companies or engaged through limited companies. Identify who within the organisation is responsible for conducting RTW checks and establish a consistent, auditable process. Review existing worker populations and address any gaps where RTW checks may not previously have been required. Undertake supply chain due diligence and review contractual arrangements with labour providers and subcontractors. Implement substitution controls to ensure replacement workers cannot commence work without appropriate verification. Assess the viability of digital identity verification, facial recognition or access-control technology where appropriate. Establish a secure process for retaining RTW records and evidence for audit and enforcement purposes. Provide training to operational and site-based teams to ensure compliance obligations are understood and consistently applied. In summary, the objective of the changes is to ensure all parties within a labour supply chain take reasonable and proactive steps to prevent illegal working, rather than relying on another organisation to manage the risk. How Does This Affect Bishopsgate Operations? Bishopsgate already conducts comprehensive RTW checks on selfemployed workers and is therefore well positioned for the proposed changes. Online identity verification services may provide additional compliance assurance, subject to client requirements and cost considerations. Bishopsgate provides client education and training sessions to support customers in updating their own compliance processes. Enhanced monitoring of workers with time-limited permissions should be implemented, with regular updates shared with clients where appropriate. Whilst Bishopsgate cannot assume responsibility for a client's RTW obligations, it can support compliance efforts through collaboration and information sharing, such as notifying clients when related compliance checks have been completed.
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By Simon Bliss • August 25, 2026
The latest UK employment data makes uncomfortable reading for the recruitment sector, but it also reinforces why independent recruitment businesses need to work differently in today's market. According to the latest Adzuna UK Job Market Report, reported by Staffing Industry Analysts, the number of UK vacancies stood at 791,490 in July 2026, down 9.6% year-on-year. This represents a reversal of some of the gradual improvement seen earlier in the year and confirms what many recruiters are already experiencing: there are fewer vacancies to compete for and clients remain cautious about hiring. However, the headline figure doesn't tell the whole story, there are still areas of growth Several important sectors continue to expand: Teaching vacancies increased 11.9% year-on-year Trade & Construction increased 8.3% Manufacturing increased 2.2% Travel vacancies increased 348% Meanwhile, average advertised salaries remain 3.01% higher than a year ago at £43,675. IT continues to command the highest average salaries at £67,771, up 16.8% annually, while salary growth was also strong in Sales (+11.3%), HR & Recruitment (+9.8%) and Consultancy (+9.5%). So while overall hiring demand has reduced, there are still sectors, skills and individual employers where significant recruitment opportunities exist. A smaller market makes every opportunity more valuable for independent recruitment businesses, perhaps the most important lesson isn't simply that there are fewer jobs. It's that every job, candidate and client relationship has become more valuable. When vacancies were plentiful, recruiters could afford to walk away from a role outside their specialism, geography or candidate network. In today's market, that is potentially lost revenue. Similarly, recruiters may already have excellent candidates sitting within their databases for whom they don't currently have a suitable vacancy, that creates a strong argument for collaboration. 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Smaller recruiters can remain agile, t here is another reason for optimism. Challenging markets often reward businesses that can move quickly. Independent recruiters typically have fewer layers of management, closer client relationships and the ability to specialise deeply in particular markets. Combine that agility with access to a wider recruitment community and suddenly a small recruitment business can have considerably greater reach than its headcount might suggest. TEAM members can draw upon fellow specialists across multiple sectors, regions and disciplines rather than trying to build every capability internally. That means remaining independent without having to operate alone. Focus on what you can control and n obody can control the overall number of UK vacancies. Recruitment business owners can, however, control how effectively they exploit the opportunities that remain. That means: Specialising – Know where your expertise genuinely adds value. Collaborating – Don't automatically turn away vacancies or candidates you can't service yourself. Working your candidate database – Great candidates already known to you are valuable assets. Expanding client conversations – Understand where clients are still hiring and where skills remain difficult to find. Using your network – Access knowledge, candidates, jobs and expertise beyond your own business. Protecting margins – In a more competitive market, quality and specialist expertise matter more than competing purely on price. Tough market. Different opportunity. The July figures show that UK recruitment remains challenging. Graduate recruitment is particularly difficult, with vacancies falling 45.6% year-on-year to a record low of 8,383, while several major sectors continue to experience significant reductions in hiring. But there are still almost 800,000 advertised vacancies across the UK, salaries continue to rise annually and several sectors are growing. For independent recruiters, the objective isn't to wait for the market to return to the conditions of a few years ago, it's to adapt to the market we have today. At TEAM, we believe collaboration is one of the ways independent recruiters can do exactly that: sharing opportunities, accessing specialist expertise and helping each other make placements that might otherwise have been lost. In a market with fewer jobs, making more of every opportunity matters more than ever.
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