The Fair Work Agency started on 7 April 2026. It is the UK’s new enforcement body for workers’ rights. It brings NMW, holiday pay, and employment agency compliance into one place. If you work through an umbrella company, it is worth knowing what it can do.
What is the Fair Work Agency?
The Fair Work Agency (FWA) is the UK’s main enforcement body for employment rights. It launched on 7 April 2026 under the Employment Rights Act 2025. It brought three separate enforcement functions together.
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.
Those three now sit inside the Fair Work Agency. That gives workers one body to contact and gives the FWA one set of powers.
The FWA can investigate employers, agencies, and umbrella companies. It can recover underpaid wages directly. It can name businesses that do not comply. It also has criminal investigation powers for 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 take a more active role on holiday pay for irregular-hours workers, including umbrella contractors.
The FWA has overall responsibility for NMW enforcement from 7 April 2026. During 2026/27, HMRC still delivers NMW enforcement under a contracting arrangement with the FWA. The full transfer of NMW staff and functions is due in April 2027. If an umbrella company pays below the National Living Wage floor of £12.71/hour from April 2026, HMRC, working under FWA direction, can investigate, recover arrears, and issue civil penalties.
Employment agency standards enforcement is live now. The FWA can investigate agencies that fail to follow the Conduct of Employment Agencies and Employment Businesses Regulations 2003. That covers improper fee charging, contract problems, and missing written terms.
Holiday pay enforcement for irregular-hours workers is not fully live yet. The FWA has the powers, but the extra regulations for umbrella contractor holiday pay are expected from 2027. Do not assume holiday pay enforcement is already at full strength.
What does the FWA mean for umbrella contractors?
Umbrella contractors now have a clearer way to report underpayment. If your umbrella company fails to pay the National Living Wage floor or withholds holiday pay, the FWA is the body to contact. It brings what used to be three 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 the FWA handles the main routes.
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. It is the same body.
The FWA can also require your employer to produce wage records. It can recover unpaid arrears. In serious exploitation cases, it can refer matters for criminal action.
What does the FWA mean for NMW and salary sacrifice?
The FWA treats the National Living Wage as a floor. After all deductions, including salary sacrifice, your total pay cannot fall below £12.71/hour from April 2026. Umbrella companies that run salary sacrifice pension contributions need to check that the NLW floor still holds after the sacrifice.
This is the practical limit on salary sacrifice for umbrella contractors. You cannot sacrifice so much into a pension that your pay drops below minimum wage. Your umbrella has to check the numbers correctly each month.
From April 2025, employer NIC rose to 15%. That cut take-home pay for many contractors. An ethical umbrella company should show every deduction clearly on your payslip and calculate the numbers properly each month.
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 come 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 who receive rolled-up holiday pay, as long as the contract says so clearly and every payslip shows it. For irregular-hours workers with accrued holiday, the 52-week average method applies instead.
This comes from the Harpur Trust ruling in 2022, and it still applies. Any umbrella that uses a flat 12.07% rate for accrued holiday pay, instead of rolled-up pay, is doing it wrong.
The FWA will be able to investigate holiday pay underpayments from 2027. That is when the rules for irregular-hours workers are expected to be fully live.
Read the full detail on umbrella company holiday pay, 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 cannot explain a deduction or your net pay looks wrong, raise it in writing. The FWA gives you a stronger route if the umbrella ignores the complaint.
The FWA does not change what you are owed. It changes how you enforce it. Contractors who keep payslips, contracts, and emails are in the best position to complain.
Know your umbrella contractor rights before you need them.
Use the umbrella take home pay calculator to check your take-home pay against a correct PAYE model.
FAQ
What is the Fair Work Agency?
The Fair Work Agency (FWA) is the UK’s main employment rights enforcement body. It launched on 7 April 2026 under the Employment Rights Act 2025. It brought together HMRC’s NMW team, the Employment Agency Standards Inspectorate, and the GLAA.
What does the Fair Work Agency enforce?
The FWA enforces the National Minimum Wage, National Living Wage, holiday pay obligations, and employment agency standards. From 2027, it will enforce holiday pay more actively for irregular-hours workers, including umbrella contractors.
What is the FWA enforcement timeline for umbrella contractors?
The FWA launched on 7 April 2026. NMW enforcement still runs through HMRC under a contracting arrangement through 2026/27, and the full transfer to the FWA is due in April 2027. Agency standards enforcement is live. Full holiday pay enforcement for irregular-hours workers is also expected from 2027.
How does the FWA affect umbrella company holiday pay?
The FWA will be able to investigate umbrella company holiday pay underpayments from 2027. The Harpur Trust ruling already requires umbrellas to use the 52-week average for accrued holiday pay with irregular hours.
What is the NLW floor for umbrella contractors after April 2026?
The National Living Wage is £12.71/hour from April 2026. Umbrella pay after all deductions, including salary sacrifice, cannot fall below this floor.
