What powers does the Fair Work Agency have?
The Fair Work Agency has broad investigative and enforcement powers. Its officers can access payroll, HR and employment records, sometimes without notice, carry out inspections remotely or in person, speak directly to employees, and investigate suspected breaches without waiting for an employee complaint. They can take legal action on behalf of workers or in the public interest, and require corrective action including payroll audits and repayment of underpayments.
This matters because issues can be pursued even where an employee has left or does not wish to come forward. The Agency is not dependent on workers being willing to raise a complaint. It can act on intelligence, data patterns or sector-wide concerns entirely independently.
Which areas does it cover?
The Fair Work Agency consolidates enforcement responsibilities that were previously spread across several separate bodies. Its remit includes National Minimum Wage and National Living Wage compliance, holiday pay, Statutory Sick Pay, the right to a written statement of employment particulars, and protections for agency workers. It will also take on responsibility for enforcing new rights introduced by the Employment Rights Act 2025 as those provisions come into force.
For most small businesses, the highest-risk areas are National Minimum Wage compliance (particularly for salaried staff who work variable hours) and holiday pay calculations for workers with irregular hours. Both of these have been subject to significant case law changes in recent years, and many employers are unintentionally non-compliant without realising it. ACAS guidance on the National Minimum Wage is a good starting point for checking your current position.
Why this matters even if you think you’re compliant
Most employers who end up under investigation are not deliberately non-compliant. They’re businesses that have grown quickly, changed working patterns over time, or inherited legacy arrangements from previous management. Payroll calculations that were set up years ago may not have kept pace with changes in legislation or working practices.
The Fair Work Agency raises the stakes in three specific areas. Record-keeping: can you evidence pay, hours and holiday accurately for every employee? Transparency: are your working practices consistent with what your contracts say? Consistency: are all employees treated in line with the same policies? Businesses that can answer yes to all three are in a good position. Those who can’t need to act now rather than later.
What happens if a breach is found?
Where the Fair Work Agency finds underpayments or non-compliance, employers can expect to be required to repay workers for any shortfall, potentially going back several years. Financial penalties can also be imposed on top of the repayment. Serious cases can result in naming and shaming through the government’s NMW enforcement list, which is publicly accessible and reputationally damaging. The Agency can also refer cases for criminal prosecution in the most serious instances.
The key difference between the Fair Work Agency and an employment tribunal claim is that the Agency acts in the public interest, not on behalf of a single employee. A tribunal claim ends when that employee’s case is resolved. A Fair Work Agency investigation can result in repayments to an entire workforce.
What you should do now
- Carry out an honest audit of your payroll records. Are pay, hours and holiday accurately recorded for every employee?
- Check your holiday pay calculations, particularly for anyone on variable or irregular hours. The rules changed in 2024 and many businesses have not updated their approach.
- Review your employment contracts against what employees are actually paid and how they actually work. Gaps between contracts and practice are a common trigger for enforcement interest.
- Make sure your Statutory Sick Pay calculations are correct, particularly following the April 2026 changes that extended SSP eligibility.
- If you’re not confident in any of these areas, get them reviewed now. Identifying and fixing gaps proactively is significantly less costly than dealing with them under investigation.
How Limelite can help
Our team helps organisations across Worcestershire, Birmingham and the wider UK audit their HR and payroll practices, update their contracts and policies, and make sure they’re in a strong position ahead of Fair Work Agency enforcement activity. Whether you need a focused compliance review or ongoing retained HR support, we can help.
Find out more about our HR project support for one-off compliance and documentation reviews. Book a free 30-minute discovery call to talk through your situation.
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About the author
Helen Scullion Assoc. CIPD, HR Client Manager at Limelite HR & Learning. Helen supports organisations with day-to-day HR management, employee relations and practical people support. Connect with Helen on LinkedIn.
