The Fair Work Agency launched on 7 April 2026. It brings state enforcement of some workers’ rights together. It covers NMW and employment agency compliance, with holiday pay enforcement expected from 2027. 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
The FWA now oversees all three. HMRC still delivers NMW enforcement for it until April 2027. So you report NMW to HMRC for now.
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 covers the National Minimum Wage, the National Living Wage, and employment agency standards. From 2027, it is also expected to enforce holiday pay, including for 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’s holiday pay powers 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, report it to HMRC. HMRC enforces it for the FWA until April 2027. The FWA is bringing state enforcement together in stages.
Before April 2026, state enforcement was spread across several bodies, and holiday pay claims went to a tribunal. The FWA now brings those bodies together, with holiday pay enforcement expected from 2027.
If your umbrella is underpaying NMW, report it to HMRC until the April 2027 transfer. If your agency is withholding fees, report it to the FWA.
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 gross pay after 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 salary sacrifice, check your payslip carefully. Start from the gross wage line, not the assignment rate. It should work out to at least £12.71/hour. Some pay items do not count, such as allowances, overtime premiums and holiday pay for time you took off. Ask Acas if you are close.
What does the FWA mean for holiday pay?
Umbrella contractors are entitled to holiday pay. The minimum is 12.07% of your total pay when holiday pay is rolled up into regular wages. The contract must say so clearly, and every payslip must show it. With irregular hours and accrued holiday, pay uses your average over the previous 52 paid weeks.
Leave builds up at 12.07% of hours worked, but that figure does not set the pay.
The FWA is expected to start enforcing holiday pay in 2027.
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 wage calculator to estimate your take-home under a correct PAYE model.
