As the Employment Rights Bill works its way through parliament, this week we are focusing on the Fair Work Agency – perhaps an under-reported facet of the Bill. “Fair Work Agency” – They may be three small words, but they will have a big impact for SME employers.
What is the Fair Work Agency?
The Fair Work Agency (FWA) has been introduced as part of the Employment Rights Bill.
It aims to provide streamlined regulation for employers and employees, combining existing agencies, like the Employment Agency Standards Inspectorate, HMRC’s National Minimum Wage Enforcement Team and the Gangmasters and Labour Abuse Authority.
The FWA will also take on some major new enforcement powers: it can take businesses to court on an employee’s behalf – even if the employee has no interest in pursuing charges.
That is a major change, and here are some of the specific areas which fall under this expansive agency’s remit, all based on what we know so far.
Holiday pay
The FWA will enforce statutory holiday pay, and you’ll be obliged to keep records of this for six years. This may be a challenge for you: holiday pay can be difficult to get right, and it applies to all staff – including part-year workers and staff with irregular hours. You could be at risk if you have a ‘wait and see’ approach to holiday pay, or if you have been issuing it correctly but not recording it.
This regulation has steep consequences. If found in breach, you’d have to pay all back pay to the worker; as well as a fine, equalling the back pay, to the government – failure to do so promptly could result in even higher penalties.
Sick pay
Statutory sick pay will also now be more actively enforced, and in a similar way to how described for holiday above. This could previously only be determined by HMRC if an employee made a complaint.
National Minimum Wage
The National Minimum Wage is currently overseen by HMRC, who already have significant enforcement powers. They’re able to require labour market enforcement undertakings, with powers to name and shame, order you to make shortfall payments and impose penalties if you fail to do so. Going forward, the FWA will be enforcing this instead.
Summary of Fair Work Agency powers
Having looked at some of the most common ways that the FWA may involve themselves with businesses, let’s summarise their powers:
- Enforcing failures to pay statutory payments, plus penalties.
- Power to require a person to provide information (in person or via documents).
- Power to enter premises, view documents and computer equipment, and seize it where they deem appropriate.
- Requesting labour market enforcement, backed by courts and criminal prosecution.
- An array of new criminal offences, including for failing to keep holiday records, providing false information and deliberately obstructing enforcement action.
- Ability to recover enforcement costs for non-compliance.
- Bringing employment tribunals on behalf of a worker (where they will not do it themselves).
- Providing legal assistance for civil proceedings relating to employment law, trade union law or labour relations.
Preparing for the Fair Work Agency
The FWA won’t be functional until late 2026 at the earliest, but this doesn’t mean you shouldn’t prepare. With new regulations and changes to existing ones, unawareness could put your business at risk of serious penalties.
It’s crucial for you to already comply with existing regulations the FWA are set to adopt – especially the ones backed by criminal or civil penalties.
But you need to keep in mind that under the FWA, the “small stuff” is about to get a lot more important. You’ll want to ensure that statutory requirements like holiday and sick pay aren’t only in order, but also efficiently documented for the correct amount of time.
Get professional support
Under the FWA, the risk to you as an employer goes up, and having the best intentions won’t be enough. You’ll need to adhere to regulations amidst all the changes of the Employment Rights Bill – whilst also running your business.
That’s where we come in. We’ll provide professional support, tailored to your company: helping you comply with employment regulations so you can focus on operations and growth with some added peace of mind.
Contact us to find out how we protect your business, before the Fair Work Agency grows its teeth.
