The Fair Work Agency – what hospitality businesses need to know
22 Jan 2026 • Hospitality • Troncmaster
Written by
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.
