Fair Work Agency 2026: What Small Businesses Need to Do Now
Posted on April 9, 2026
From 7 April 2026, the new Fair Work Agency (FWA) will change how employment law is enforced in the UK and SMEs are firmly in the spotlight.
This isn’t about new rules. It’s about stricter enforcement of existing ones. And if your processes aren’t solid, it could cost you!
What’s Changing?
The Fair Work Agency replaces three enforcement bodies with one central authority.
That means:
- Stronger powers to inspect and penalise
- Faster, more coordinated enforcement
- Greater focus on everyday compliance
- Less chance of issues slipping through
What the FWA Will Check
The focus is on the basics:
- Minimum wage compliance (including unpaid time, deductions, uniform costs)
- Holiday pay and sick pay accuracy
- Clear, accessible records (contracts, payslips, timesheets)
- Agency and umbrella worker arrangements
If you can’t show compliance, you’re at risk.
The Real Risk for SMEs
Most issues aren’t deliberate, they are admin gaps:
- Inconsistent holiday calculations
- Outdated contracts
- Scattered records
- Payroll that’s hard to evidence
This is exactly what the FWA will target.
What It Could Cost
If underpayment is found:
- Up to 200% penalty + arrears (capped at £20k per worker)
- Reduced to 100% if paid within 14 days
- £1k–£20k+ enforcement costs
- Claims going back 6 years
- Public naming and reputational damage
What SMEs Should Do Now
Focus on six essentials:
- Check pay calculations
Ensure all staff meet National Minimum Wage, once deductions and unpaid time are included
- Get records in order
Accurate, accessible pay, hour, and holiday records (keep for 6 years from April 2026)
- Update contracts
Make sure they reflect how people actually work and are paid
- Review policies
Holiday, sickness, working time, and agency worker policies must be up to date
- Train managers
Make sure they understand compliance basics and record-keeping
- Audit agency workers
Confirm agreements and compliance don’t assume
The Bottom Line
The Fair Work Agency doesn’t change the law it shines a spotlight on whether you’re following it. Don’t think that it will only be big Businesses where the spotlight will be shone. Indeed, small Businesses may be moreso at risk because processes haven’t been developed, and that’s where the risk lies.
If you fix that now, and you’ll stay on the right side of enforcement.
