Will the Fair Work Agency put immigration enforcement before workers’ rights?
When the Labour Party pledged to establish a single enforcement body for key employment rights in its manifesto, the plans were met with widespread support. The new Fair Work Agency (FWA) would “better support businesses,” “create a strong, recognisable single brand so individuals know where to go for help,” and “lead to a more effective use of resources.”
A single enforcement body is sorely needed, given the many inefficiencies of the current system, and the scale of labour market non-compliance in the UK. The Resolution Foundation estimated that in 2022, 400,000 workers experienced National Minimum Wage underpayment and as many as 900,000 had no access to statutory annual leave. Both of these rights will be within the body’s remit for enforcement, and in many ways the Fair Work Agency has the potential to be revolutionary.
Just months away from the Fair Work Agency’s inauguration in April 2026, we are concerned that the agency’s focus and resources are being shifted - not towards protecting the most vulnerable workers, but towards tougher immigration enforcement. Setting up a ‘hidden economy’ team within the Fair Work Agency, as the Chancellor outlined in her budget, might score political points. But a focus on raiding car washes achieves little for workers across the UK economy, and fails to address systemic drivers of labour exploitation. We urge ministers to put workers first.
Why the Fair Work Agency is sorely needed
To date, compliance with relevant laws has been driven by three primary labour market enforcement (LME) agencies:
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Employment Agency Standards Inspectorate (EAS), which regulates the activities of employment agencies and businesses in Great Britain.
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The HM Revenue & Customs (HMRC) National Minimum Wage team, which enforces compliance with National Minimum Wage legislation.
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The Gangmasters and Labour Abuse Authority (GLAA), which licences and regulates labour suppliers in certain sectors (e.g. agriculture) and investigates more extreme forms of labour exploitation.
The success of these agencies has been limited at best. First, labour market enforcement agencies should, in theory, offer the opportunity to avoid stressful litigation and access justice swiftly. Yet the three agencies’ narrow remit means that most workers have to litigate in the Employment Tribunal to access most employment rights. This is onerous for those less able to access legal support and incredibly time-consuming. As of January 2025, most Employment Tribunals were taking over 12 months to list hearings lasting three or more days, with some regional Tribunals taking over 30 months to list particularly complex, long hearings.
Second, LME bodies have historically been underresourced, with insufficient staff on the ground and limited capacity for proactive investigations. The DLME’s 2023-25 report shows that enforcement activities have been scant, relative to the scale of infringements by employers. Although both are fairly effective, the HMRC National Minimum Wage (NMW) team identified just 25,230 workers with arrears of pay in 2024-25 (compared with the 400,000 estimate of the ResoultioN Foundation), and the GLAA referred a mere 14 potential victims of modern slavery that year into the National Referral Mechanism (a negligible fraction of the 9,137 adults referred as potential victims of labour-related modern slavery across the UK).
Finally, there is the issue of fragmentation. Several previous governments were aware that having multiple labour market enforcement agencies confused workers and employers, muddied the intelligence picture across the labour market, and limited visibility of the bodies’ operations.
The Fair Work Agency has the potential to revolutionise access to employment rights
The Fair Work Agency should have the ability to improve workers’ access to employment rights, and enable redress when these rights are breached. The Employment Rights Bill, which will establish the Fair Work Agency, confers robust powers and expands upon the remit of the labour market enforcement bodies. The Fair Work Agency will also work more closely with industry, trade union and expert stakeholders, who will be represented on its advisory board.
Expanded enforcement powers. As it stands, labour market inspectors will be able to impose legally binding orders and notices upon rule-breaking businesses, across the areas of its remit. The Fair Work Agency will continue to adopt a balanced approach, enabling employers to correct less egregious infringements without formal repercussions.
Individual liability. Even where an individual is not an employer, they may also face individual liability in some cases. This includes the continuation of existing powers to pursue individuals criminally for obstruction of investigatory or other enforcement activity, as well as new provisions. The Fair Work Agency is set to work more closely with the Insolvency Service and, as stated in the 2025 Budget document, might even exercise “powers in the Companies Directors Disqualification Act 1986 (CDDA) to disqualify directors whose abuse of workers’ rights makes them unfit to be concerned in the management of a company.”
Wider remit. It has already been confirmed that the Fair Work Agency’s remit will go beyond the existing areas of law covered by the three LME bodies that will make it up. Additionally, the Fair Work Agency will cover:
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Statutory sick pay (SSP). It is due to take over this function from the HMRC team that currently enforced non-compliance in this space. This will be particularly important in light of SSP becoming a day one right.
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Statutory holiday pay. This is a completely new area of enforcement, with holiday pay rights having been traditionally claimed in the Employment Tribunal.
These two new additions to remit should take place shortly after the formal establishment of the Fair Work Agency in April 2026. Further expansion of remit is also envisaged once operations are running smoothly, although no further details have been shared yet.
Following the Budget, the Fair Work Agency is pushed towards a worrying new direction
Not all is rosy. The 2025 Budget, published on 26 November, raises significant concerns about the Fair Work Agency’s ability to deliver on its promises. The document promises the elimination of the current casework backlog, greater collaboration with stakeholders and the aforementioned exploration of additional enforcement powers - these are welcome provisions. Worryingly, however, the government highlights its aim to also use the Fair Work Agency as a tax and immigration enforcement vehicle:
“The government will set up a dedicated ‘hidden economy’ team within the new Fair Work Agency from April 2026 to take action in sectors known to have egregious breaches of employment rights legislation alongside illegal working and tax issues. The team will initially target hand car washes but will then move onto other high‑risk areas.”
- Policy paper, Budget 2025, Updated 28 November 2025
It is troubling to see that even before any money has been allocated to the Fair Work Agency, the government has effectively earmarked some of it for objectives that are within the scope of HMRC and the Home Office, not a labour market enforcement agency. The Fair Work Agency already has millions of workers and businesses to oversee, and a complicated setup process to navigate. Now, it will have two additional objectives on its shoulders, and it is unclear how it can be expected to perform in this context.
This is an important risk. Historically, the UK has had barely a third of the number of labour inspectors recommended by the International Labour Organisation. Given this chronic underfunding and the scale of labour market non-compliance, every pound matters - some of those limited resources will now go towards what HMRC and Home Office ought to be doing, not the Fair Work Agency.
Imposing an immigration enforcement objective on the Fair Work Agency would be a disservice to all workers, not just migrants working illegally. Targeting car washes because they have a higher share of workers with inadequate or no right to work, would result in limited remedy for those exploited workers. Illegal working is an offence under the Immigration Act 2016, and any income from it can be confiscated as proceeds of crime, so many workers would simply get no compensation. At the same time, the Fair Work Agency’s attention would be diverted from myriad other sectors with systemic non-compliance, such as agriculture, construction and hospitality.
Not only would workers across the labour market lose out on compensation, trust in the Fair Work Agency as an institution would be strongly damaged. Workers without adequate permission to work will not come forward, and others would avoid reporting, to protect their colleagues. This, in turn, would be detrimental to the government’s understanding of the labour market non-compliance landscape and the Fair Work Agency’s access to intelligence.
It’s time to refocus on supporting workers
Naturally, it is only right for the Fair Work Agency to look at the hidden economy, where exploitation is rife. We support the agency's focus on extreme forms of labour exploitation, of which the car wash industry is just one example. However, the focus of such operations has to be on supporting workers, not just making a spectacle out of arresting unscrupulous bosses. What might this look like?
There must be a robust programme of identifying and referring victims of modern slavery, and ensuring that compensation for workers is secured. The track-record of the GLAA for referring victims of modern slavery is modest at best and driven by a lack of capacity. The Fair Work Agency must do better.
The Fair Work Agency should also interrogate the immigration policies that are pushing migrants into the hidden economy and press the Home Office to reform them. The Fair Work Agency could champion the adoption of a Workplace Justice Visa for migrant victims of labour exploitation, following the model in Australia. And crucially, secure reporting is essential to empower workers in the hidden economy to speak out about labour abuse, without fear of immigration enforcement.
These changes are all possible. Implementing them will not only boost the reputation of and trust in the Fair Work Agency from all workers, but also increase intelligence flows into the agency.
The government wants to engage expert stakeholders, so we urge them to listen closely. If the Fair Work Agency is to perform for all workers in the labour market and deliver on its principal objective, it should revert to the remit clearly outlined in the manifesto - the Fair Work Agency should be created “to ensure employment rights are upheld.” There is still time to refocus.