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The Fair Work Agency Explained: Guidance for Employers

A significant employment law change came into force in April 2026 with the introduction of the Fair Work Agency (FWA). While it has attracted less attention than some headline reforms under the Employment Rights Act 2025, the FWA represents a fundamental shift towards proactive, ‘state led’ enforcement of employment rights, with important implications for employers across all sectors.

What is the Fair Work Agency?

Operational from 07 April 2026, the Fair Work Agency is the UK’s new single enforcement body consolidating several existing regulators under one central authority.

It consolidates enforcement functions previously carries out by:

• HMRC (National Minimum and Living Wage enforcement)
• The Employment Agency Standards Insepctorate
• The Gangmasters and Labour Abuse Authority

The FWA enforces compliance across key areas including minimum wage, statutory sick pay, holiday pay, employment pay, employment agency standards, gangmaster licensing, labour exploitation, and the non-payment of Employment Tribunal awards and COT3 settlements.

What powers does the Fair Work Agency have?

The government has moved towards a more centralised, proactive enforcement model. The FWA has powers to investigate, intervene and penalise employers directly, including the ability to:

• Launch investigations on its own initiative
• Inspect payroll and HR records
• Enter business premises
• Speak directly to workers and managers
• Take enforcement action in the public interest

It may also provide legal assistance to workers and bring Employment Tribunal proceedings in its own name to recover unpaid wages or holiday pay where workers have not pursued claims themselves.

Why is this important to employers?

The most significant change is not the creation of new employment rights, but how existing rights are now enforced.

• Proactive enforcement: The FWA does not need to wait for an employee complaint or Tribunal claim before taking action.
• Evidence-based compliance: Employers must be able to clearly evidence payroll accuracy, holiday pay calculations (particularly for variable-hours workers) and pay decisions. Poor record-keeping significantly increases enforcement risk.
• No intent required: Enforcement is based solely on whether a breach occurred. Genuine mistakes or technical errors can still result in penalties if compliance cannot be demonstrated.
• Significant financial and operational exposure: Penalties can be up to 200% of the underpayment per employee, capped at £20,000. This means that even relatively minor or historic errors can quickly escalate into substantial liabilities, alongside disruption to the business and reputational damage.

Practical steps for employers

Employers should now treat compliance readiness as an operational priority:

• Audit payroll and holiday pay calculations, particularly for variable or irregular hours staff, overtime and deductions.
• Strengthen record-keeping, ensuring pay, hours worked, holiday entitlement and holiday pay records are accurate, accessible and retained for the required period.
• Align HR and payroll processes to avoid gaps or inconsistencies in data and decision-making.
• Train managers to formally document decisions relating to pay, hours and working arrangements, rather than relying on informal practices.

What are we still waiting to find out?

Although the Fair Work Agency is now operational, some aspects of its role will evolve over time. Employers should watch for:

• Phased enforcement and transitional arrangements during 2026 as responsibilities fully transfer.
• Further guidance on enforcement priorities is expected, including sector focus and investigation triggers.
• Potential expansion of remit, as the Employment Rights Act 2025 allows the FWA’s enforcement scope to be widened in the future.

Further detail is expected through government guidance and secondary legislation during 2026, and employers should monitor developments closely.

To discuss the Fair Work Agency, please contact our Employment team.

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Whistleblowing and Unfair Dismissal: Key Employment Law Changes for 2026–2027

Significant changes under the Employment Rights Act 2025 are now coming into force, with major implications for how employers handle complaints, probation and early dismissals. Two reforms in particular demand immediate HR attention.

• 6 April 2026 – Sexual harassment is now expressly protected as whistleblowing
• 1 January 2027 – Unfair dismissal qualifying period reduces to six months with the compensation cap being removed

Sexual Harassment is Now Protected as Whistleblowing

From 6 April 2026, disclosures about sexual harassment are explicitly recognised as ‘protected disclosures’ under the whistleblowing legislation. Previously, a worker who reported sexual harassment in the workplace was primarily protected through the ‘victimisation’ provisions of the Equality Act 2010. Whilst the Employment Rights Act 1996 (as amended by PIDA 1998) already covered disclosures about breaches of a legal obligation (which could arguably encompass sexual harassment), the addition of sexual harassment as an express qualifying disclosure category removes any ambiguity and materially strengthens the position of individuals making these reports.

What is the impact of the change?

• Now recognised ‘whistleblowing’ complaint. Therefore, employees raising sexual harassment concerns are protected from detriment and dismissal, regardless of length of service.
• Any dismissal linked to such a disclosure will be automatically unfair.
• Non disclosure agreements (NDA’s) and confidentiality clauses cannot prevent these disclosures.

Key risk for employers

With the changes in place, most exposure will typically arise not from policy failures but from manager reactions to receiving complaints. The whistleblowing protections apply even if the complaints are not labelled as ‘whistleblowing complaint’.

Informal handling of sexual harassment complaints, defensive responses, or a poor separation between managing complaints and any subsequent disciplinary action will all create risks of claims.

What employers should be doing now

• Update policies. Ensure whistleblowing, grievance and dignity-at-work policies clearly reference sexual harassment and align in practice.
• Train managers urgently. Managers need clarity on what constitutes whistleblowing, how to respond to harassment disclosures, and when not to act.

Unfair Dismissal Protection Will Apply Much Earlier

From 1 January 2027:

• The qualifying period for unfair dismissal claims reduces from the current two years to six months.
• At the same time, the current cap on unfair dismissal compensation is being removed.
• Employees with six months’ service may request written reasons for dismissal.

What is the impact of the change?

Employers will have far less time to identify, manage and document underperformance before full unfair dismissal rights apply, significantly increasing financial and litigation risk.

Key risk for employers

Employers and HR teams need to act swiftly with new underperforming staff. It will no longer be safe to give new staff a long settling in period before assessing their performance or fit within the company.

What employers should be doing now

• Rethink probation processes. Performance concerns must be identified, documented and addressed well before the six-month point.
• Strengthen documentation. Clear records, well-defined roles, early performance expectations and strict separation between complaints and disciplinary decisions are now essential.

Final Thought

These changes represent a cultural shift, not just a legal one. Earlier unfair dismissal rights and stronger whistleblowing protection mean employers must rely on good process, early intervention and confident, well-trained managers. For HR teams, this is now a business-critical capability.

To discuss how the Employment Rights Act 2025 impacts your business, please contact our Employment Team.

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The End of The Zero-Hours Contract?

What the changes in the Employment Rights Act 2025 could mean for your business.

As one of the most common contract types in retail, health & social care and hospitality sectors, the proposed changes to zero-hour contracts in the new Employment Rights Act 2025 will have significant implications for businesses.

What are Zero-Hour Contracts and Where Can They Be Used?

The term zero-hour contract is often used interchangeably with part-time contracts but there are specific and important differences. Currently, under most zero-hour contracts:

• The staff are “workers” not “employees” and have less employment protections;
• There is no statutory obligation to offer or accept shifts on either the business or worker;
• Shifts can generally be scheduled or cancelled at short notice, subject to contract;
• There is no right to compensation or minimum notice required for cancelling or changing shifts;
• There is no presumption that the shifts will be available or offered again.

Proposed Changes

Under the new Employment Rights Act 2025 there are broadly three changes which will have a significant impact on the use of zero-hours contracts:

• There will be a new requirement to offer staff “Guaranteed Hours”;
• There will be a new requirement to provide “reasonable notice” when offer shifts to zero-hour workers and other staff;
• There will be a new requirement to provide “minimum notice” of cancellation or change to shifts.

Each of these are further explained below.

Guaranteed Hours

Staff on either zero-hour contracts or “low-hours” contracts who have worked regular hours over a “reference period” must be offered a contract with guaranteed hours “reflecting” those hours. Within this requirement there are a number of points which the Employment Rights Act does not define:

• What is meant by “low-hours” contracts?
• What is defined as a “reference period”?
• How closely must the contract “reflect” the hours worked during the “reference period”?

These points will be clarified following a formal consultation with key stakeholders. It is anticipated that “reference period” will be between 12 weeks and 6 months but we will have to wait to see the final proposals, likely to be ready by summer this year.

Following the initial “reference period”, businesses must offer the worker the average number of guaranteed hours that they worked during the “reference period”. This must be under new contractual terms guaranteeing those hours, and on the days/times or working pattern that were worked during the reference period.

The worker will have the option to either accept the new offer, or to keep the flexibility of their existing zero-hour contract. Businesses will have to continue to assess the hours worked by staff while they have “low-hours” contracts, after each further “reference period”. The duty to offer guaranteed hours continues at future reference points.

The changes once implemented will require businesses to inform their staff of their rights under the new guaranteed hours regime and keep them informed while they qualify.

Reasonable Notice When Offering Shifts

Businesses will be required to give “reasonable notice” of shifts when offering them to zero-hour workers or shift employees. As with the guaranteed hours changes, the following details have not been defined:

• What is meant by “reasonable notice”; and
• What are the exemptions to the notice requirement.

These terms again will be defined following consultation, expected by the summer of 2026.

The new Act envisages setting a minimum amount of time that has to be provided when offering shifts to zero-hour staff. This however is not defined in the Act and the details will be part of the consultation process.

The requirement to provide “reasonable notice” will also apply to employees who are on rota shift contract, which is where the hours of work are set but the days and pattern of work can vary at the business’s discretion.

Where businesses fail to provide “reasonable notice” for the shifts, the worker can bring a claim to the Employment Tribunal and compensation will be assessed on what the Tribunal “considers just and equitable in all the circumstances to compensate the worker for any financial loss sustained by the worker which is attributable to the matter complained of.” This could lead to claims including bank overdraft charges or credit card late payment fees which the worker faces when a shift they expected is not offered to them.

Minimum Notice of Cancellation or Change

Under the new Act, businesses will have to provide “reasonable notice” of a change or cancellation of a shift which had been accepted by the zero-hour staff. Again, what is meant by “reasonable notice” is still to be defined.

In addition to the requirement to provide “reasonable notice” of changes or cancellation of shifts, the Act introduces the right to compensation for zero-hour staff if their shift is cancelled, moved or curtailed at “short notice”. The zero-hour staff will be entitled to a payment every time there is “short notice” of a cancellation or change of shift. Further, the payment will have to be paid to the staff within a specific time frame.

As with all of the above upcoming changes, the devil will be in the detail, and the Act is yet to define:

• What is meant by “short notice” when cancelling, changing or reducing a shift;
• What exemptions will apply to the “notice” requirement;
• What compensation payment amount will businesses have to make to staff for short notice cancellation and shift changes;
• How quickly businesses have to make the payment.

The Act does specify that “short notice” for cancelling a shift will be less than 48-hours before the proposed shift start time. The meaning of “short notice” when moving a shift or reducing a shift will be set by Government after consultation.

Who Is Covered By The Changes?

Businesses can still be caught by the new regime even if they do not use zero-hour or “low-hour” workers. The new requirements will apply equally to agency workers.

With agency workers, both the end user hirer and agency will have equal responsibility for providing the worker with the necessary notice of changes to shifts. However, the changes specify that is is the agencies which will be responsible for paying the agency worker and have the ability to recoup the cancellation and short notice fee from the end user, subject to the commercial terms of the agreement between the end user and agency.

Implementation Timeline

While the Employment Rights Act 2025 became law on 18 December 2025, the Government has confirmed they will not be implementing these changes immediately. There remains a significant number of specific details to be clarified. Under the Governments current timeline, which updated in February 2026, there is to be a period of consultation on these details, with the changes likely due to come into effect in 2027.

For further information on the Employment Rights Act 2025 and how it could impact your business, get in touch with our Employment Team.

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