What is the Fair Work Agency UK?

The Fair Work Agency (FWA) is the UK's new consolidated employment-rights enforcement body, bringing together four existing enforcement bodies, created under the Employment Rights Act 2025 and launched on 7 April 2026. If you're running UK payroll, whether directly or through an Employer of Record, this agency now has the power to investigate your Statutory Sick Pay compliance, issue penalties of up to 200% of underpaid amounts, and publicly name non-compliant employers.

For mid-market companies with UK employees, the FWA represents a fundamental shift in enforcement risk. The fragmented approach that previously let SSP errors slip through the cracks has been replaced by a single agency with real investigative powers and a six-year lookback window. That's not a typo. An enforcement action in 2026 can reach back to payroll periods as early as 2020.

Let's talk about what the FWA can actually do to your business, who's in their crosshairs, and what you need to fix before they come knocking.

What the Fair Work Agency can do to you

The Fair Work Agency went live on 7 April 2026. One team. One set of inspectors. One place where all the employment complaints land.

Get SSP wrong and you'll pay up to 200% of what you underpaid, maxing out at £20,000 per worker. That's on top of paying what you owe.

The FWA can pursue SSP arrears for up to six years of back liability, meaning a 2026 enforcement action can reach back to payroll periods as early as 2020.

The 2025-2026 reforms added 1.3 million more workers to SSP coverage. That's 1.3 million more chances for your payroll to get it wrong.

The £20,000 cap is per worker. Mess up SSP for 25 people? That's £500,000 in penalties alone, before you pay back wages and fix your systems.

The FWA can walk into your office and demand to see SSP calculations, fit notes, eligibility decisions, and payroll runs. You don't get to say no.

They publish your name when you fail. In 2023/24, the government's existing naming scheme publicly identified 524 employers for minimum wage breaches. Watch framework bids disappear. Watch candidates ghost your recruiters. Watch your union get interested.

What powers does the Fair Work Agency have?

The Fair Work Agency consolidates enforcement of SSP, national minimum wage, and other employment rights into a single body with substantial investigative and penalty powers. This isn't a passive regulator waiting for complaints. The FWA can initiate investigations proactively.

The agency's enforcement toolkit includes workplace inspections with powers to enter business premises and examine records. Investigators can require employers to produce payroll documentation, absence records, and eligibility calculations going back six years. They can also inspect computer systems where payroll data is stored.

When the FWA determines underpayment has occurred, it can issue enforcement notices requiring employers to pay arrears to affected workers. But the financial exposure doesn't stop there. Civil penalties of up to 200% of the underpaid amount can be added, capped at £20,000 per worker. A £10,000 SSP underpayment can therefore trigger up to £20,000 in penalties for the same breach, before arrears repayment and investigation costs.

The public naming power deserves particular attention. The FWA can publish the identity of non-compliant employers, creating reputational consequences that extend well beyond the immediate financial penalties. For companies in regulated industries or those dependent on public sector contracts, this exposure can affect business relationships and procurement eligibility.

Who does Fair Work Agency enforcement affect?

Every UK employer falls within the FWA's jurisdiction. This includes companies headquartered in the UK, international companies with UK employees, and Employer of Record providers acting as the legal employer for UK-based workers.

The location of your headquarters doesn't matter. If you have employees working in the UK, the Fair Work Agency can investigate and enforce against you. A US company with a small UK team faces the same enforcement framework as a London-based business with thousands of employees.

For companies using EOR arrangements, the compliance picture requires careful examination. The EOR is typically the legal employer and can be the immediate target of FWA enforcement. But this doesn't eliminate exposure for the client business. Operational control, data quality, and contractual allocation of liability can still create financial and reputational risk even when the EOR handles payroll execution.

Consider a mid-market company using an EOR for 15 UK employees. The client company approves absences, controls return-to-work decisions, and manages timesheets. If those operational data inputs contain errors that cause SSP underpayment, the EOR may face the enforcement action, but the client's contractual indemnities and operational causation of the problem create parallel exposure.

Teamed's analysis of EOR arrangements finds that SSP accuracy depends heavily on operational data even when payroll execution is outsourced. Companies using EOR should review their governance arrangements to understand where accountability sits and whether their provider has robust SSP compliance processes.

What triggered the creation of the Fair Work Agency?

The FWA emerged from years of under-enforcement of employment rights. Previous enforcement was fragmented across multiple bodies with limited resources and overlapping mandates. Workers struggling to recover unpaid statutory entitlements often faced bureaucratic complexity that made enforcement impractical.

The SSP reforms expanding eligibility to approximately 1.3 million additional workers, increasing annual employer costs from £650 million to £1.07 billion, required a credible enforcement mechanism. Without robust enforcement, expanded eligibility would remain theoretical for many workers. The government recognised that rights without enforcement are merely suggestions.

The Employment Rights Act 2025 provided the legislative foundation. The FWA consolidates enforcement functions that were previously scattered across different agencies, creating a single point of accountability for employment rights compliance. This consolidation means more coordinated investigations, shared intelligence across enforcement areas, and a more systematic approach to identifying non-compliant employers.

For employers, this consolidation changes the risk calculus. The previous fragmented approach meant enforcement was inconsistent and often reactive. The FWA's consolidated model enables proactive investigation and more efficient deployment of enforcement resources.

Does the Fair Work Agency apply to companies based outside the UK?

Yes. The Fair Work Agency applies to UK employment situations based on where the worker is employed and works, not where the employer is headquartered. A company based in Germany, the United States, or Singapore with UK employees faces the same FWA enforcement framework as a UK-domiciled business.

This has significant implications for international companies with UK operations. Whether you employ UK workers directly, through a subsidiary, or via an Employer of Record, the enforcement powers apply. The FWA can investigate, issue penalties, and publicly name non-compliant employers regardless of where corporate headquarters are located.

For companies using EOR arrangements to employ UK workers, the enforcement dynamic requires careful consideration. The EOR becomes the legal employer and the immediate target for enforcement. But contractual terms between the EOR and client company typically include indemnification provisions that can transfer financial exposure back to the client.

Teamed's work with mid-market companies expanding into the UK consistently highlights the importance of understanding this enforcement landscape before establishing UK employment. The right structure and the right compliance posture matter more now that enforcement has teeth.

Can the Fair Work Agency fine my business?

The FWA can impose civil penalties on employers found to have underpaid statutory entitlements including SSP. These penalties can reach 200% of the underpaid amount, with a cap of £20,000 per affected worker.

The per-worker calculation is crucial for understanding exposure. This isn't a single penalty per employer or per incident. Enforcement exposure scales with the number of affected individuals. A systematic SSP calculation error affecting 50 workers creates potential penalty exposure of up to £1 million, plus arrears repayment and investigation costs.

The six-year lookback window amplifies this exposure. An error that has persisted across multiple payroll years can generate substantial arrears and associated penalties. Companies that have changed payroll providers, implemented new HRIS systems, or modified absence policies during that period face particular risk because configuration drift is a leading cause of SSP underpayments.

Arrears and penalties serve different purposes and are calculated separately. Arrears repay the worker the unpaid statutory entitlement. Penalties are additional civil sums payable due to non-compliance. Both can apply to the same underpayment, and both can be pursued over the six-year lookback period.

How should employers prepare for Fair Work Agency enforcement?

Preparation starts with understanding your current SSP compliance posture. If you can't produce SSP eligibility rationale, sickness evidence handling, and payment calculations for historical periods, you have a records problem that will be difficult to defend in an FWA investigation.

Audit your payroll systems, particularly if you've changed providers or implemented new HR technology within the last 24 months. Configuration drift during system changes is a common source of SSP errors. Review how absence data flows from managers to payroll and whether eligibility determinations are being applied correctly.

Centralise UK absence recording if managers currently approve sickness through multiple channels like email, Slack, spreadsheets, or separate HRIS modules. Fragmented data creates audit gaps. The FWA can request documentation going back six years, and reconstructing eligibility decisions from scattered sources is both expensive and unreliable.

For companies with multiple UK employing entities or multiple payroll run schedules, conduct a formal SSP controls review. Inconsistent eligibility and absence coding rules across entities increase the probability of systematic underpayment that scales into significant enforcement exposure.

If you employ atypical worker populations with variable hours, seasonal patterns, agency-like arrangements, or frequent starters and leavers, seek legal review of your SSP processes. Eligibility determinations and payroll triggers are more error-prone in edge cases, and these populations often represent the highest enforcement risk.

What does Fair Work Agency enforcement mean for EOR arrangements?

EOR arrangements don't eliminate SSP enforcement exposure. They change where the immediate enforcement action lands, but the underlying compliance risk remains connected to operational data quality and contractual terms.

The EOR is the legal employer responsible for payroll filings and statutory payments. When the FWA investigates SSP compliance, the EOR is the entity that must produce records, respond to enforcement notices, and pay any penalties or arrears. But the client company still controls day-to-day work and therefore influences the data inputs that determine SSP outcomes.

This creates a governance challenge. If your EOR provider has weak SSP compliance processes, or if your operational data inputs are causing calculation errors, the enforcement consequences may ultimately flow back to you through contractual indemnities. The EOR may be the legal employer, but the client often bears the economic risk.

Teamed's GEMO (Global Employment Management and Operations) advisory framework emphasises that companies using EOR should confirm their provider's compliance posture specifically around SSP. This means understanding how the EOR handles eligibility determinations, what absence data they require, how they calculate SSP amounts, and what records they maintain.

For mid-market companies with UK employees through EOR, the Fair Work Agency's launch should prompt a governance review. Understand the contractual allocation of liability. Verify that your provider has robust SSP processes. Ensure your operational data inputs are accurate and well-documented.

What's the difference between FWA enforcement and other compliance risks?

The Fair Work Agency differs from HMRC in focus and approach. HMRC's traditional focus is tax collection and certain labour-market enforcement areas like National Minimum Wage. The FWA is designed to enforce a broader set of employment rights including SSP and related worker protections.

An FWA investigation differs from a civil employment tribunal claim in initiation and scope. The FWA can initiate enforcement proactively as a regulator, whereas tribunal claims are typically employee-initiated disputes seeking individual remedies. The FWA can investigate patterns of non-compliance across your entire workforce, not just respond to individual complaints.

For medium and large organisations, this creates parallel risk channels. The FWA can pursue arrears and penalties for SSP underpayment while HMRC can separately assess tax liabilities under rules such as IR35. Worker-status and payroll compliance must be managed holistically because enforcement bodies don't coordinate their actions.

The public naming power distinguishes FWA enforcement from purely financial penalties. Reputational exposure can affect procurement eligibility, employee relations, and business relationships in ways that extend well beyond the immediate financial consequences.

If you have UK payroll, do these three things now

The Fair Work Agency represents a meaningful shift in UK employment enforcement. The combination of proactive investigation powers, substantial penalties, a six-year lookback window, and public naming creates compliance risk that mid-market companies cannot afford to ignore.

For companies with UK employees, whether employed directly or through an EOR, the time to review your SSP compliance posture is now. Audit your payroll systems, centralise absence recording, implement six-year records retention, and understand where accountability sits in your employment arrangements.

If you're using an EOR for UK employees and aren't confident in your provider's compliance processes, that's a conversation worth having. Teamed works with mid-market companies to ensure the right structure for where they are and trusted advice for where they're going. Talk to an Expert about your UK employment compliance posture and whether your current arrangements are ready for Fair Work Agency enforcement.