The Fair Work Agency launches today as one of the first major employment reforms to go live under the Employment Rights Act, giving the UK a single body for much of its labour market enforcement and putting retailers on notice over pay, record-keeping and compliance.

From today, the new agency is officially in place as an executive agency sponsored by the Department for Business and Trade.

In practical terms, that means the government is starting to pull together what had previously been a fragmented enforcement landscape, with the Fair Work Agency absorbing the functions of HMRC’s National Minimum Wage unit, the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement.

For retailers, the significance is less about a single dramatic rule change on day one and more about a clear shift in tone.

Employer guidance says the agency will not itself create new legal obligations, but it will change where businesses go for support, how enforcement is organised and, potentially, how visible inspections and investigations become.

The same guidance also makes clear that employers should already be reviewing compliance with existing rights including National Minimum Wage, holiday pay and agency worker rules.

The retail sector is especially exposed to the kinds of complexity that enforcement bodies tend to focus on, being large frontline workforces, variable hours, overtime, seasonal peaks, layered pay structures and regular use of temporary labour.

PwC UK’s Anna Vishnyakov said holiday pay is likely to be one of the most immediate pressure points for employers, particularly in consumer-facing sectors such as retail, leisure and manufacturing, where compliance can be harder to manage across complex payroll models.

So what changes today?

At launch, the Fair Work Agency is bringing together enforcement of key rights including National Minimum Wage, employment agency protections and gangmaster licensing into one place.

Official business guidance says it will gain responsibility for additional areas, including holiday pay, over time, while the broader rollout of the Employment Rights Act is being phased across 2026 and 2027.

There has been some confusion in the market because advisers are already treating the agency as part of a tougher overall framework on holiday pay and sick pay.

But the government’s own factsheet says implementation will happen in stages, starting with the establishment of the body in April 2026 and the consolidation of existing enforcement functions.

The biggest immediate watchout: holiday pay records

Even if holiday pay enforcement evolves over time, one April change retailers should not overlook is record-keeping.

Under the Employment Rights Act, employers must keep adequate records to show they have complied with annual leave and holiday pay rules, and those records must be retained for six years.

Government business guidance highlights this as one of the headline changes now in force.

That may sound administrative, but for retailers it could become one of the most operationally sensitive parts of the reform package. Businesses with irregular-hours workers, part-time colleagues, overtime arrangements, different premiums and multiple payroll inputs will need confidence that their systems can evidence not just what they paid, but why it was correct.

Vishnyakov said this is an area where regulation is not always fully aligned with modern working practices, especially where monthly payrolls sit against weekly-based holiday pay rules.

Payroll teams also need to be ready for sick pay changes

Alongside the launch of the agency, employers are also dealing with wider April employment changes that will shape the compliance backdrop. From the week commencing 6 April (this week), Statutory Sick Pay became available without the Lower Earnings Limit and without the old three-day waiting period.

Government guidance says eligible employees are now entitled to SSP from the first full day of sickness absence, paid at 80 per cent of normal weekly earnings or the flat weekly rate of £123.25, whichever is lower.

HMRC’s employer bulletin says businesses should confirm their payroll provider is prepared and make sure managers understand the new rules, which is likely to be particularly relevant in store-based operations with high staff turnover or large part-time workforces.

Who is running the agency?

The Fair Work Agency will be led by chair Matthew Taylor and chief executive Lisa Pinney, who joins from the Mining Remediation Authority and previously spent more than 20 years at the Environment Agency.

The government has also appointed a nine-member advisory board with equal representation from employer, trade union and independent backgrounds, including employer-side members Neil Carberry, Mustafa Faruqi and Joanne Young.

That structure is designed to give the agency both enforcement teeth and a more consultative edge.

Ministers have repeatedly framed the FWA as a body that should support compliant employers as well as clamp down on bad actors. Business-facing guidance makes the same point, saying most employers who already follow the law should mainly see better access to guidance and support.

What can workers and employers do now?

The government has already published the first contact and complaints routes under the new agency banner. Workers can use a single “pay and work rights” form to raise concerns about National Minimum Wage breaches, employment agencies, gangmasters and working hours, while serious abuse or exploitation at work can also be reported directly to the agency.

Acas remains the route for free employment rights advice for employers and employees.

That centralisation is one of the most tangible day-one changes. For retailers, especially larger groups with multiple banners, formats or labour providers, it means there is now a clearer single point of escalation for complaints that might previously have sat across different enforcement bodies.

Why some are already sceptical

The launch has not been without criticism. Days before go-live, trade unions and labour market advocates warned the agency risked becoming too focused on “reducing regulatory burdens” rather than tough enforcement, with Unite describing it as being in danger of becoming “a dead duck before it even begins”.

The Guardian also reported that a fuller kick-off is expected in October, with the agency’s first full strategy due in April 2027.

For grocers, though, the more relevant point is that the direction of travel is clear regardless of that political debate. The launch comes just weeks after the government named 389 employers for minimum wage breaches, with more than £7.3m in owed wages repaid to workers and £12.6m in penalties issued.

That does not mean retail will be singled out, but it does show the enforcement environment is already becoming more public.

The legal framework will continue to evolve in phases, but the immediate priorities are already obvious. Stress-test payroll, clean up holiday pay processes, make sure annual leave records are robust, review agency worker arrangements and ensure internal governance is strong enough to withstand a more visible enforcement regime.

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