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From April 2026, a new organization – the Fair Work Agency – will begin to reshape the way employment rights are enforced across the UK.

Back office teams at schools and trusts need to know what this entails. While this is not in itself a change in employment law, it does represent a change in how the law is actively enforced.

The Fair Work Agency will provide tighter scrutiny of organisations, support for aggrieved staff and sanctions for wrongdoing.

In this article, we look at what powers this agency has, who runs it, and what areas it could tackle first.

What is the Fair Work Agency?

The Fair Work Agency was established as part of the government’s Make Work Pay programme. It was created by 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 Labor Abuse Authority (GLAA).

It also has additional powers to review furlough pay and the possibility of expanding its areas of control.

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

Does this new Fair Work Agency affect schools and trusts?

Absolutely. The Fair Work Agency’s mission is to review employers in the public and private sectors.

This agency will apply across the UK. Where specific rules differ in devolved countries, this will be reflected in the guidance. Simply put, most schools and trusts in England should assume that they fall squarely within the agency’s scope.

Why was the Fair Work Agency created?

The creation of the Fair Work Agency reflects a clear policy direction. Ministers highlighted persistent underpayment of wages, withholding of holiday pay and exploitation of workers, as well as weak and inconsistent enforcement, as reasons for its introduction.

The aspiration behind the Fair Work Agency is twofold:

• HAS better protect workersparticularly in sectors with complex salary arrangements
• HAS level the playing field for employers who already comply with the law but are compromised by those who do not

It is worth remembering that this is not about creating new employment rights overnight. It is rather a matter of enforce existing rights more coherently and visibly. To do this, it will use the powers of the state, instead of relying on individuals to challenge non-compliance in court.

Who runs the Fair Work Agency?

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

He is the author of the influential Taylor Review of Modern Working Practiceswhich laid the foundations for many of the changes currently being made through the Employment Rights Bill. He also served as Director of Labor Market Enforcement and has extensive experience in public policy, labor 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 include:

• Public holiday payincluding paid leave for irregular hours and part-year staff
• National minimum wage and national living wageincluding record keeping
• Statutory sick pay
• Rules for employment agencies and temporary workers
• Gangmasters and labor market violationsif applicable
• Non-payment of compensation or Employment Tribunal settlements

Among these changes, paid leave stands out. Historically applied almost entirely through individual claims, it will now be subject to state enforcement.

What the Fair Work Agency doesn’t cover (yet)

Not all employment rights fall within the jurisdiction of the Fair Work Agency. Areas such as unfair dismissal and discrimination will, for the time being, continue to rely largely on the employment tribunals. However, the law gives the government broad powers to extend the agency’s powers in the futurethis landscape can therefore continue to evolve.

Which areas will be affected most quickly?

Although the Fair Work Agency will have a broad mandate, commentators have suggested that National minimum wage and holiday pay are likely to be part of the top enforcement priorities.

For schools and trusts this is important as risks often arise in the following areas:

• Fixed-term contracts only
• Staff all year round and irregular hours
• Overtime, overtime and casual arrangements
• Agency and Procurement Staff

It goes without saying that accurate payroll and impeccable record-keeping have never been more important.

What enforcement powers does the Fair Work Agency have?

The Fair Work Agency will have a single and reinforced set of enforcement powersinspired by and expanding those used by existing organizations. These include the ability to:

• Inspect workplaces and request documents
• Require employers to provide information and evidence
• Issue notices requiring reimbursement of underpaid wages or vacation pay
• Impose financial sanctions
• To recover execution costs non-compliant employers
• Bringing cases to employment tribunals on behalf of workers
• Use labor market enforcement commitments and orders, with criminal sanctions for violations

What this could look like in practice for schools

In practice, the application will probably start with requests for informationrather than surprise inspections. Schools and trusts may be asked to produce:

• Payroll records
• Calculation of leave entitlement and payment
• Records of hours worked
• Contracts and Policies

For multi-academy trusts, engagement will most likely take place at the level of trustwhich makes consistent processes and central monitoring particularly important.

Governance and reputation risk

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

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

Preparation does not require radical change, but it does require trust in the fundamentals. So, which areas should you address now and in what order?

1. Audit salary and leave compliance. Pay particular attention to paid holiday benefits for staff working part-time, part-year and irregular hours. Make sure you meet the national minimum wage. Check statutory sick pay and family leave entitlements.
2. Review and update policies. This includes salary, leave and temporary workers. Ensure that policies reflect the statutory rights and enforcement powers of the Fair Work Agency.
3. Strengthen record keeping. Ensure hours, pay and time off are accurate and recoverable.
4. Train HR and payroll staff.Make sure they are aware of the powers, application and risk areas of the Fair Work Agency. Train them on how to calculate holiday pay, as well as management agency and umbrella company arrangements.
5. Prepare for checks. This includes appointing a compliance officer and agreeing on internal processes.
6. Communicate clearly with staff.Inform them of the rights and channels for reporting internal information. Let them know how they can raise concerns internally.
7. Integrate Compliance into Governance. Add Fair Work Agency risk to records and audit cycles.

Starting this work now reduces the likelihood of urgent corrective action later.

Temporary 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, especially as contingent workers and flextime are likely to come under early scrutiny.

Prepare with confidence

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

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

If you want to confidently prepare for the Fair Work Agency and reduce the risks of non-compliance between now and 2026, now is the right time to act.

Discover our Every By IRIS solutions, and simplify your life.

Also:

Find out how to outsource to education payroll specialists.

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