What is the Fair Work Agency, and how can admins prepare their schools and trusts?

From April 2026, a new body – the Fair Work Agency – will begin reshaping how employment rights are enforced across the UK.

School and trust back-office teams need to know what this entails. Although it’s not a change to employment law in and of itself, it does represent a change in the way the law is actively enforced.

The Fair Work Agency will bring greater scrutiny of organisations, support for aggrieved staff, and penalties where wrongdoing has been found.

In this piece, we look at the powers this agency has, who runs it and what areas they might tackle first.

What is the Fair Work Agency?

The Fair Work Agency came into being as part of the government’s “Make Work Pay” programme. It was created through the Employment Rights Act 2025.

The ambition is to bring together three agencies – HMRC’s National Minimum Wage Enforcement, the Employment Agency Standards Inspectorate (EAS), and the Gangmasters and Labour Abuse Authority (GLAA).

It also has extra powers to look at holiday pay and the ability to add to its areas of scrutiny.

This Fair Work Agency will actively investigate, inspect, and enforce compliance directly, rather than rely on complaints.

Does this new Fair Work Agency affect schools and trusts?

Absolutely. The Fair Work Agency’s remit is to look at public and private sector employers.

This agency will apply across the UK. Where specific rules differ in devolved nations, this will be reflected in guidance. Put simply, most schools and trusts in England should assume they are fully within the agency’s scope.

Why has the Fair Work Agency been created?

The creation of the Fair Work Agency reflects a clear policy direction. Ministers have pointed to persistent underpayment of wages, withheld holiday pay, and worker exploitation, alongside weak and inconsistent enforcement, as reasons for its introduction.

The aspiration behind the Fair Work Agency is twofold:

• To better protect workers, particularly in sectors with complex pay arrangements
• To level the playing field for employers who already comply with the law but are undercut by those who do not

It’s worth remembering that this is not about creating new employment rights overnight. Instead, it is about enforcing existing rights more consistently and visibly. It will do so using state-led powers, instead of relying on individuals to challenge non-compliance through tribunals.

Who runs the Fair Work Agency?

Matthew Taylor CBE is the first Chair of the Fair Work Agency.

He authored the influential Taylor Review of Modern Working Practices, which laid the groundwork for many of the changes now being delivered through the Employment Rights Bill. He has also served as Director of Labour Market Enforcement and has extensive experience in public policy, labour markets and workforce reform.

What areas does the Fair Work Agency cover?

Initially, the Fair Work Agency will enforce a defined set of employment rights, many of which are highly relevant to schools and trusts. These comprise:

• Statutory holiday pay, including rolled-up holiday pay for irregular hours and part-year staff
• National Minimum Wage and National Living Wage, including record‑keeping
• Statutory sick pay
• Employment agency and agency worker rules
• Gangmasters and labour market offences, where relevant
• Failure to pay Employment Tribunal awards or settlements

Holiday pay is a standout among these changes. Historically enforced almost entirely through individual claims, it will now be subject to state enforcement.

What the Fair Work Agency does not cover (yet)

Not all employment rights fall under the Fair Work Agency’s remit. Areas such as unfair dismissal and discrimination will, for now, continue to rely largely on Employment Tribunals. However, the legislation gives the government broad powers to expand the agency’s remit in future, so this landscape may continue to evolve.

Which areas will be affected most quickly?

Although the Fair Work Agency will have a wide remit, commentators have suggested that National Minimum Wage and holiday pay are likely to be among the earliest enforcement priorities.

For schools and trusts, this matters because risk often arises around:

• Term-time only contracts
• Part-year and irregular hours staff
• Overtime, additional hours, and casual arrangements
• Agency and supply staff

Needless to say, accurate payroll and immaculate record-keeping have never been more important.

What enforcement powers does the Fair Work Agency have?

The Fair Work Agency will have a single, strengthened set of enforcement powers, drawn from and extending those used by existing bodies. These include the ability to:

• Inspect workplaces and request documents
• Require employers to provide information and evidence
• Issue notices requiring repayment of underpaid wages or holiday pay
• Impose financial penalties
• Recover enforcement costs from non-compliant employers
• Bring cases to Employment Tribunals on behalf of workers
• Use Labour Market Enforcement Undertakings and Orders, with criminal sanctions for breach

What this could look like in practice for schools

In practice, enforcement is likely to begin with information requests, rather than surprise inspections. Schools and trusts may be asked to produce:

• Payroll records
• Holiday entitlement and payment calculations
• Hours worked records
• Contracts and policies

For multi-academy trusts, engagement will most likely happen at trust level, making consistent processes and central oversight particularly important.

Governance and reputational risk

Non-compliance is a legal problem, and it can expose boards and trustees to serious governance and audit questions. If underpayment becomes public, a school’s reputation can also be at risk.

Checklist: how to prepare your school for the Fair Work Agency

Preparation does not require wholesale change, but it does require confidence in fundamentals. So which areas should you tend to now, and in what order?

1. Audit pay and leave compliance. Pay particular attention to holiday pay for term-time, part-year and irregular hours staff. Ensure you are compliant with the National Minimum Wage. Verify statutory sick pay and family leave entitlement.
2. Review and update policies. This includes for pay, leave and agency workers. Ensure policies reflect statutory rights and Fair Work Agency enforcement powers.
3. Strengthen record‑keeping. Ensuring hours, pay and leave are accurate and retrievable.
4. Train HR and payroll staff. Make sure they know about Fair Work Agency powers, enforcement and risk areas. Train them on holiday pay calculations, as well as handling agency and umbrella company arrangements.
5. Prepare for inspections. This includes naming a compliance lead and agreeing on internal processes.
6. Communicate clearly with staff. Inform them about rights and internal escalation routes. Let them know how they can raise concerns internally.
7. Embed compliance into governance. Add Fair Work Agency risk to registers and audit cycles.

Starting this work now reduces the likelihood of urgent remediation later.

Agency workers, outsourcing and shared responsibility

Remember: you are still responsible, even if you outsource payroll or use agency staff.  

Clear oversight, robust contracts and confidence in payroll calculations are essential, particularly as agency workers and variable hours arrangements are likely to attract early scrutiny.

Preparing with confidence

The Fair Work Agency represents a significant shift in how employment rights are enforced. For schools and trusts, the message is as follows: enforcement will likely be more active, more consistent, and more focused on pay and leave.

With the right systems, records and expertise in place, this does not need to be a cause for concern. At IRIS, we support schools and trusts with specialist education payroll and HR solutions, including outsourced payroll designed to handle the complexity of term-time, part-year and irregular hours staff.

If you want to prepare confidently for the Fair Work Agency and reduce compliance risk ahead of 2026, now is the right time to act.

Discover our Every By IRIS solutions, and make life easier.

Also:

Find out how to outsource to education payroll specialists.

Or reach out and message our HR specialists directly at HR-DP@iris.co.uk