The Fair Work Agency launched on 7 April 2026. It’s the UK’s new single enforcement body for workers’ rights. It brings three separate enforcement areas under one roof: NMW, holiday pay, and employment agency compliance. If you work through an umbrella company, it matters what powers it actually has.
What is the Fair Work Agency?
The Fair Work Agency (FWA) is the UK’s consolidated enforcement body for employment rights. It launched on 7 April 2026 under the Employment Rights Act 2025. It brings together three enforcement functions that were previously separate organisations.
Before the FWA, enforcement was split:
– The Gangmasters and Labour Abuse Authority (GLAA) handled labour exploitation and licensing
– The Employment Agency Standards Inspectorate (EASI) regulated employment agencies
– HMRC’s National Minimum Wage team enforced NMW and living wage
All three now sit inside the Fair Work Agency. One body. One set of powers. One place to go when enforcement is needed.
The FWA can investigate employers, agencies, and umbrella companies. It can recover underpaid wages directly, name and shame non-compliant businesses, and use criminal investigation powers in the most serious labour abuse cases.
What does the FWA enforce?
The FWA enforces the National Minimum Wage, the National Living Wage, holiday pay obligations, and employment agency standards. From 2027, it will also enforce holiday pay more actively for workers with irregular hours — including umbrella contractors.
The FWA has overall responsibility for NMW enforcement from 7 April 2026. During 2026/27, HMRC continues to deliver NMW enforcement under a contracting arrangement with the FWA, with the full operational transfer of NMW staff and functions scheduled for April 2027. If an umbrella company fails to pay the National Living Wage floor (£12.71/hour from April 2026), HMRC — under FWA direction — can investigate, recover arrears, and issue civil penalties.
Employment agency standards enforcement is live too. The FWA can investigate agencies that fail to comply with the Conduct of Employment Agencies and Employment Businesses Regulations 2003. That covers things like improper fee charging, broken contract terms, and failure to provide written terms.
Holiday pay enforcement for irregular workers is coming, but it is not fully active yet. The FWA has the powers, but the regulations that extend them to umbrella contractor holiday pay specifically are expected from 2027. Don’t assume holiday pay enforcement is already running at full strength.
What does the FWA mean for umbrella contractors?
Umbrella contractors get a clearer route to report underpayment. If your umbrella fails to pay the National Living Wage floor, or withholds holiday pay, the FWA is the body to contact. It brings together what were previously three separate reporting routes into one.
Before April 2026, a contractor with a holiday pay issue had to deal with different enforcement bodies depending on the problem. Now it’s the FWA for all of it.
The practical change is simpler complaints and quicker escalation. If your umbrella is underpaying NMW, you report it to the FWA. If your agency is withholding fees, you report it to the FWA. Same body. One complaint.
The FWA can require your employer to produce wage records. It can recover unpaid arrears. And in serious exploitation cases, it can refer matters for criminal action.
What does the FWA mean for NMW and salary sacrifice?
The FWA enforces the National Living Wage as a floor. Your total pay — after all deductions including salary sacrifice — cannot fall below £12.71/hour (April 2026 rate). Umbrella companies that run salary sacrifice pension contributions must make sure the NLW floor is still met after the sacrifice.
That is the practical limit on salary sacrifice for umbrella contractors. You can’t sacrifice so much into a pension that your remaining pay falls below minimum wage. Your umbrella has to calculate this correctly.
From April 2025, employer NIC increased to 15%. That has reduced take-home pay for many contractors. An ethical umbrella company runs these calculations correctly every month and shows all deductions clearly on your payslip.
If you think your pay is below the NLW floor after deductions, check your payslip carefully. The gross wage line, not the assignment rate, must work out to at least £12.71/hour for every hour you worked.
What does the FWA mean for holiday pay?
Umbrella contractors are entitled to holiday pay. The standard rate is 12.07% of gross pay for workers paid their holiday pay rolled up into regular wages, as long as this is clearly stated in the contract and shown on every payslip. For irregular-hours workers with accrued holiday, the 52-week average method must be used instead.
This is the Harpur Trust ruling from 2022, and it still stands. Any umbrella using a flat 12.07% rate for accrued, not rolled-up, holiday pay is getting it wrong.
The FWA will be able to investigate holiday pay underpayments from 2027. That’s when holiday pay enforcement powers for irregular workers are expected to become fully operational.
Read the full detail on how umbrella holiday pay is calculated — including how rolled-up pay, accrued pay, and the 52-week average method work in practice.
A guide on umbrella holiday pay enforcement is also available.
What should contractors check about their umbrella now?
Check that your payslip shows NLW-compliant gross pay, correct holiday pay, and all deduction lines clearly. If your umbrella can’t explain a deduction or your net pay seems wrong, raise it in writing. The FWA gives you a stronger enforcement route if your umbrella ignores the complaint.
The FWA doesn’t change what you’re entitled to. It changes how easily you can enforce it. Contractors who keep records — payslips, contracts, correspondence — are in the best position to make a complaint.
Know your statutory employment rights before you need them.
Use the umbrella take home pay calculator to verify your take-home against a correct PAYE model.
