New enforcement body marks welcome milestone for employment rights but Government must give it more powers to protect all workers  

New enforcement body marks welcome milestone for employment rights but Government must give it more powers to protect all workers  

The establishment of the Fair Work Agency is an important step towards better enforcement of employment rights, but to be a success it needs adequate powers and funding, the Resolution Foundation said today (Tuesday).

The Fair Work Agency (FWA) comes into existence today (7 April), the day after new provisions in the Employment Rights Act on sick pay and parental leave take effect. This marks a significant milestone in the biggest overhaul of workers’ rights in a generation. But these rights will only prove as strong as the body that enforces them, and the FWA starts off already spinning several plates, as many workers are already missing out on their existing rights.

Almost half a million (445,000) of the lowest paid jobs were estimated to be paying below the minimum wage in 2025. However, in the preceding financial year HMRC enforcement identified only 25,000 underpaid workers. The reports adds that a shocking 1.4 million workers reported not receiving a payslip in 2023-24, rendering them unable to check they were being paid what they were owed.

A new single body to tackle these labour market abuses is welcome and can enable a more coordinated approach than the current patchwork of agencies. The new agency will be a clear point of contact for workers and employers alike. And from next year, it will also enforce sick and holiday pay – helping to tackle the estimated 2.2 million jobs in 2025 that did not provide paid annual leave.

But establishing the FWA is only the first step to creating an enforcement system that matches the Government’s ambition on employment rights. To make this a success the Government must go further on three outstanding issues.

First, the funding for the new agency has not yet been announced, but the funding of the bodies it is replacing has flatlined in recent years. Given the scale of non-compliance, and that the UK has just one labour market inspector per 24,000 workers – well below the International Labor Organization’s benchmark of one per 10,000 – the Government should keep the FWA’s budget under review to ensure it has sufficient resources to effectively enforce workplace rights.

Second, most of the powers of the new agency are largely based on those of the previous bodies – but these are set at too low a rate to be an effective deterrent. The Government needs to back up its support for employers to comply with their obligations by meaningful penalties for those who still do not abide by the rules. Higher revenue from these penalties could help pay for some of the additional resources the agency needs.

Third, migrant workers are at heightened risk of exploitation, in part because their visas are increasingly tied to their employer, but may be unwilling to come forward for fear of having their details shared with immigration enforcement. To ensure these more vulnerable workers feel comfortable raising non-compliance, the FWA should establish a data firewall with immigration enforcement.

Setting the FWA on a firm footing will empower it to reduce the high levels of non-compliance in the UK labour market, and allow it to adapt in the face of future challenges. That will be good for workers, and help to ensure fair competition for the majority of employers who are committed to following the law.

Hannah Slaughter, Principal Economist at the Resolution Foundation, said:

“The creation of the Fair Work Agency marks an important and welcome step in the UK’s enforcement of employment rights. But to be effective the new agency will need sufficient funding and powers, and must ensure migrant workers feel able to make a complaint.

“With a shocking number of workers in Britain being paid below the minimum wage, the Fair Work Agency cannot be a new face on the same old enforcement regime. Instead, it must go further in tackling rogue employers, ideally with a larger budget and the power to levy greater fines.

“As workers begin to gain new rights on sick pay and parental leave – with more to come on contracts and hours – the Government must give its new Agency the means to ensure all workers are getting what they’re owed.”

Notes to Editors

• Copies of ‘The Labour Market Outlook Q1 2026’ by Hannah Slaughter are now available from the press office. For more information contact Angelica Ottaway on 020 3372 2955.