From April 2026, the Government will launch the Fair Work Agency (FWA), a new enforcement body created under the Employment Rights Act 2025. Its purpose is to ensure workers receive the pay and rights they are legally entitled to and to hold employers accountable where they do not.

What the fair work agency will enforce

The FWA will take over responsibility for enforcing:

• National Minimum Wage and National Living Wage

• Holiday pay, including new rules on rolled-up holiday pay

• Statutory Sick Pay

• Agency worker regulations

• Modern slavery and labour exploitation laws

• Payment of tribunal awards

And from 2027, the FWA will also regulate umbrella companies, creating tighter monitoring of labour supply chains.

For hospitality employers, this means dealing with one enforcement body rather than several (HMRC, the Employment Agency Standards Inspectorate, and the Gangmasters & Labour Abuse Authority).

What powers will it have?

The FWA will have significant powers, including:

• Workplace inspections

• Requests for records, documents and evidence

• Issuing Underpayment Notices covering arrears plus 200% penalties, recoverable up to six years

• Bringing tribunal claims on behalf of workers

• Recovering enforcement costs from non-compliant employers

• Pursuing civil and criminal sanctions for serious breaches

For compliant employers, this should create a fairer operating environment. For employers who fall short, the consequences will be far more serious than before.

What this means for hospitality

Hospitality businesses should begin reviewing and strengthening:

• Pay accuracy, particularly minimum wage compliance for variable hours and deductions

• Holiday pay calculations, including rolled up holiday pay where applicable

• Sick pay processes

• Agency worker arrangements

• Record keeping (the FWA will expect detailed, accurate audit trails)

With higher penalties and the introduction of proactive inspections, the FWA represents a shift from reactive complaints to active enforcement.

The bottom line

The Fair Work Agency marks a significant move towards stronger enforcement, higher penalties, and greater scrutiny of workplace practices. Responsible operators will benefit from clearer and more consistent oversight. Employers who do not meet the required standards will face increased risk.

How we can support hospitality employers

The introduction of the Fair Work Agency means hospitality businesses must evidence that their pay, record-keeping and tipping arrangements meet stronger compliance expectations. Where tips are received, employers must be able to show that their tipping structure is independent, transparent and supported by governance that aligns with the Tipping Act, the Employment Rights Act changes and HMRC’s NIC rules.

Buzzacott Troncmaster Services provides independent oversight of tronc arrangements to ensure allocations are made without employer influence, are compliant with current legislation, and are supported by clear audit trails. This helps employers operate a compliant tipping structure and prepares them for the higher enforcement standards coming into effect from 2026.