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The Fair Work Agency: what it can ask employers for

Written 30 August 2026 · about a 6 minute read

There is no shortage of articles explaining what the Fair Work Agency is. There are very few that answer the question an operator actually has, which is what it will ask you to hand over, and whether you could hand it over this week. This is that list, taken from the agency’s own enforcement policy statement rather than from other people’s summaries of it.

Not legal advice. We build workforce software. Everything below links to the primary source. Where published summaries disagree with each other — and on one significant number they do — this page says so rather than picking one.

What it is

The Fair Work Agency was established on 7 April 2026 as an executive agency of the Department for Business and Trade, acting on behalf of the Secretary of State. It consolidates enforcement functions that previously sat with separate bodies — including national minimum wage enforcement, employment agency standards, and gangmasters and labour abuse enforcement — into one place.

The practical change is not that new rules arrived. It is that a single body now holds the powers, and that its remit is expanding on a schedule rather than being fixed.

What it can require you to do

Per the Fair Work Agency enforcement policy statement, its officers may:

On entry: officers may enter with consent, or obtain a warrant where one is needed, and follow the government’s Code of Practice on Powers of Entry. A warrant is required to enter a dwelling without consent — worth knowing if your registered office is somebody’s house, which for a great many small operators it is.

The penalty, and the number most articles get wrong

Where it finds underpayment, the agency can issue a Notice of Underpayment. The penalty is:

ElementAmount
Penalty200% of the total underpayment across all workers named in the notice
Minimum£100 where the calculated amount would be less
Maximum£20,000 per worker
Prompt paymentPenalty reduced by 50% if the unpaid wages and half the penalty are paid in full within 14 days

Read that last row carefully

The gov.uk statement says the penalty is reduced by 50% — so a 200% penalty becomes 100%. Several published summaries, including some from firms selling compliance services, say it reduces to 50%. Those are very different numbers: on a £10,000 underpayment it is the difference between a £10,000 penalty and a £5,000 one.

We have gone with the wording in the agency’s own policy statement. If you are budgeting for an actual notice, read the statement yourself and take advice — do not take the figure from us either.

Because the penalty is a multiple of the underpayment rather than a flat fine, the exposure scales with how long something went unnoticed and how many people it touched. A small error in how one allowance is treated, repeated across forty staff for two years, is not a small number.

What that looks like on real numbers

Suppose an allowance was wrongly excluded from holiday pay, costing twelve staff an average of £340 each over eighteen months. The underpayment is £4,080. The penalty is 200% of that — £8,160 — on top of repaying the £4,080 itself. Settle the wages and half the penalty within fourteen days and the penalty halves to £4,080, so the total lands near £8,160 rather than £12,240.

The per-worker cap of £20,000 rarely binds in a case like that; it binds when one individual has been underpaid heavily over a long period. The thing that drives the number for most employers is not severity but duration multiplied by headcount, and both of those grow quietly while nobody is looking.

What it will actually ask you to produce

The powers are about documents. So the useful question is which documents. Expect:

Notice what these have in common. They are all records that are easy to produce for the current month and progressively harder the further back you go, which is the opposite of how an investigation looks at them.

What is in scope now, and what is not

The agency’s remit was deliberately limited at launch and is widening in stages. Minimum wage sits firmly in scope. Reporting indicates holiday rules come into scope during 2027, with statutory sick pay to follow on timing still to be confirmed.

Two things follow, and they pull in opposite directions, so hold both:

One thing we could not verify

Several reputable summaries state that the agency can bring employment tribunal proceedings on a worker’s behalf, which would be a significant change — a claim would no longer depend on an individual being willing to bring it. The gov.uk enforcement policy statement does not describe that power, and we could not confirm from a primary source whether it exists, is in force, or is yet to be commenced.

So we are not asserting it. If you are relying on the point either way, check it with an employment solicitor. We would rather leave a gap here than fill it confidently and wrongly.

What to do this quarter

  1. Establish whether you could produce six years of holiday records today, for a named employee, without asking anyone to remember anything.
  2. Check that recorded hours reflect what was worked, not what was rostered.
  3. Find out where records from any previous payroll or rota system live, and whether anyone can still open them.
  4. Identify who in your business would field a request for documents by a specified date, and whether they know where everything is.

None of that is a software purchase. It is an audit, and most operators who do it honestly find at least one gap in the first hour.

The reason to do it now rather than when enforcement widens is simple arithmetic. A Notice of Underpayment can look back years, and records have a six-year memory. Whatever an inspection examines in 2028, you are creating it — or failing to create it — this month. There is no version of this where starting later is cheaper.

Sources

Found something here that is out of date or wrong? Tell us at info@opsicle.co.uk and we will fix it and say so.