The Fair Work Agency
The Fair Work Agency
The ERB announces the introduction of the Fair Work Agency (FWA), a new regulatory body which will be responsible for enforcing certain employment rights.
The FWA will oversee areas such as National Minimum Wage compliance, holiday pay calculations, and additional payments for cancelled shifts. Under current proposals, the FWA will be able to enforce failure to keep adequate records for holiday pay, and it will have the ability to enforce holiday pay with a civil penalty. The FWA will also have the power to bring proceedings in the Tribunal on the behalf of workers, and to provide, or arrange for provision of, legal advice and representation for any person who is a party to proceedings relating to employment or trade union law.
Importantly, enforcement is expected to operate through anonymous tip-off helplines, meaning that employers may be subject to investigations or audits without being aware of who has lodged a complaint. Enforcement officers will have the power to enter business premises to examine documents, require any person on the premises to produce documents, or check any computer or other equipment used to process or store information or documents. They will also be able to seize documents.
In addition, one new power of the FWA will be to request a ‘Labour Market Enforcement Undertaking’ (LME). If it is believed that a person has committed a ‘labour market offence’ (for example national minimum wage legislation), they can be asked to give an undertaking to comply with any requirements set out in an LME.
Failure to comply with an LME order is a criminal offence.
It is unlikely that the FWA will be up and running before Autumn 2026 at the earliest, but it is nevertheless worth taking note of what is on the horizon.
What This Means for Employers
We cannot help but recall the quote from the witches in the opening scene in Macbeth: ‘fair is foul and foul is fair….’!
While the introduction of a dedicated enforcement body is designed to improve compliance and worker protections, it also raises concerns about additional regulatory burdens, increased scrutiny of businesses, and potential unintended consequences.
Ultimately, the FWA’s significance will depend on its resources and funding. Although it is likely to generate its own revenue through imposing penalties, additional substantial resources will still be required for it to function effectively.
The combination of longer time limits for bringing Employment Tribunal claims (increasing from 3 months to 6 months) and the creation of the Fair Work Agency is likely to result in an increased number of disputes. Employers will need to be especially cautious when handling dismissals, redundancies, and flexible working requests. Businesses should also be prepared for potential audits and compliance checks from the FWA, which could lead to increased administrative burdens and the need for more robust record-keeping.
Whilst stronger enforcement may benefit employees, businesses could face challenges if the FWA takes an overly aggressive approach, leading to investigations based on unverified or minor complaints. The risk for small businesses and startups is particularly concerning. Whilst large corporations may have dedicated HR and legal teams to manage compliance, smaller entitles could struggle with increased compliance costs (particularly if new reporting obligations are introduced) and costly legal battles.
To prepare for the FWA, employers should focus on enhancing their documentation and record-keeping practices. Keeping thorough records of disciplinary actions, performance management, and dismissal decisions will be critical in defending any claims that arise. Employers should also keep track of key personnel who leave the organisation, as their testimony may be needed if an Employment Tribunal claim is brought at a later stage. Preparing cases early and ensuring all relevant evidence is retained can significantly improve an employer’s ability to defend itself against claims.
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