Fair Work Agency report highlights widespread labour market non-compliance
A recent Fair Work Agency report has highlighted widespread non-compliance with employment rights across the UK, reinforcing the importance of proactive compliance and increasing the likelihood of more robust enforcement activity.
Looking for more detail on how the Employment Rights Act could affect your organisation? Our Employment Rights Act tracker gives you a structured, up to date view of the reforms, with clear timelines, practical commentary and prompts to help you understand what is changing, when it matters, and what to do next.
What is the Fair Work Agency?
The Fair Work Agency (FWA) was established under the Employment Rights Act 2025 and launched in April 2026. It consolidates several existing enforcement functions into a single body, bringing together HMRC’s National Minimum Wage enforcement team, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority.
The aim is to strengthen and streamline the enforcement of employment rights, with a particular focus on proactive investigations and improving compliance across the labour market.
What does the new report say?
On 11 May 2026, the FWA published a report examining labour market non-compliance and harmful workplace practices across the UK over the two years leading up to summer 2025.
The report found that 14% of UK workers experienced at least one breach of core employment rights now falling within the FWA’s remit. These included failures relating to National Minimum Wage compliance, itemised payslips, written particulars and agency worker protections.
The report also highlighted a much broader range of workplace concerns, including unlawful deductions from wages, unpaid additional working hours, bullying and harassment, leave-related difficulties and negative mental health impacts linked to work. Overall, around seven in ten workers reported experiencing at least one harmful workplace issue during the period studied.
Importantly, the report suggests that labour market non-compliance may be far more widespread than previously assumed, rather than being confined to a small number of rogue employers.
Why this matters for employers
The publication of the report is likely to reinforce the FWA’s early enforcement focus, particularly in relation to National Minimum Wage compliance. Employers should expect continued emphasis on audits, inspections and proactive investigations.
National Minimum Wage compliance remains a particular risk area. Common issues can include unpaid additional hours, inaccurate recording of working time, deductions from pay and compliance issues affecting apprentices, younger workers and casual staff.
The report also reflects a broader policy direction towards increased scrutiny of workplace practices and worker wellbeing. Employers should therefore view compliance more holistically rather than focusing solely on technical pay requirements.
Steps employers can take now
Employers may wish to review their current arrangements to identify any areas of potential risk before they attract regulatory attention. Practical steps may include auditing pay and working time arrangements, reviewing deductions practices, ensuring payroll systems reflect current National Minimum Wage rates and training managers on compliance risks associated with unpaid working time.
Clear record-keeping will also remain important. Accurate records of hours worked, pay arrangements and deductions can help demonstrate compliance if concerns are raised or an investigation takes place.
For more information please contact Matt Verrier in our Employment Team.
Get in touch today
Are you looking for legal services?
Fill out our form to find out how our specialist lawyers can help you.