The Fair Work Agency: ERA 2025

The Fair Work Agency: ERA 2025

The ERA 2025 has caused significant changes within employment law, and whilst the big headlines have received a lot of attention, it seems as though the launch of the Fair Work Agency (FWA) has been slightly forgotten.

What is the FWA?  

The FWA was launched on the 7 April and is a new government body that has merged three previously separate agencies, HMRC’s National Living Wage enforcement unit, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate, into one single regulator.

The FWA has significant powers, which are already in force, that go beyond what the individual agencies had before. Some of the key powers include: 

·        Certain police powers for the purpose of criminal investigation into labour market offences, including powers to arrest.

·        Initiating investigations proactively without the need for a worker complaint.

·        Bringing Employment Tribunal claims in the name of a worker without their consent.

·        Entering business premises without invitation for inspections.

·        Recovering up to 6 years of unpaid wages.

·        Imposing financial penalties of up to 200% of sums owed.

The FWA will ensure compliance with worker’s rights and will provide a united front for employees who believe their rights have not been upheld. However, it must be noted that in practice, it may struggle to proactively enforce rights and use some of its powers within a Tribunal system that is facing such significant delays.

What does this mean for you?

The bottom line is that employers need to be actively ensuring their practices are compliant and could withstand inspection, as the FWA has shifted from a reactive to a proactive model of enforcement.

If you haven’t done so recently, now is a good time to:

·        Review national minimum wage compliance.

·        Review holiday pay and statutory sick pay (particularly in line with the updated law on SSP from April 2026).

·        Ensure record keeping is accurate, thorough, and accessible in case of an unannounced inspection.

·        Review agency worker processes, if applicable.

Reviewing your processes is (even more) crucial now because if, for example, a small mistake is being made in holiday calculations and resulting in underpayment, the FWA can impose a financial penalty of up to 200% of the sum sowed. If that mistake is happening over multiple employees, spanning multiple years, that could be a significant financial penalty.

Although the FWA is a new regulator, the Employment Team at Leathes Prior has extensive expertise from years of supporting clients in relation to the three previously separate agencies, including representation at relevant Tribunal hearings. This experience means we are well-placed to guide and represent employers should they face investigation or prosecution by the FWA or require advice regarding any of the steps outlined above.

If you would like to get in touch with the Team, please contact Eleanor Disney - edisney@leathesprior.co.uk.