What the Fair Work Agency's first-year plan means

The agency's ambition is to create a more coherent enforcement framework, which it describes as moving “from fragmented enforcement to joined-up impact”.

Its first-year priorities are intended to support the UK Government's wider goals of simplifying guidance and support for employers, strengthening data and intelligence, improving awareness of employment rights, and preparing for expanded enforcement responsibilities from April 2027.

What are its year-one priorities?

To support these objectives, the delivery plan is structured around three themes: Deliver, Build and Innovate.

Under ‘Deliver’, the FWA aims to maintain existing enforcement performance, improve guidance and customer services, strengthen stakeholder engagement and make effective use of its enforcement powers.

Under ‘Build’, the agency will focus on organisational capability, governance and preparing for major changes, including the integration of National Minimum Wage (NMW) enforcement activity and future responsibilities.

Under ‘Innovate’, the FWA plans to develop new compliance tools, improve guidance and digital services, and strengthen its use of data, technology and Artificial Intelligence (AI). Planned developments include an online payslip explainer, a holiday pay calculator and work towards a unified case management system with integrated AI capability.

Key developments employers should monitor

The transition to NMW enforcement

The FWA has statutory responsibility for NMW enforcement, although HMRC will continue delivering that function under contract during year one. Their performance metrics for 2026/27 are the same as for 2025/26.

The plan confirms preparations for the transfer of around 500 NMW specialists and associated systems from HMRC to the FWA from April 2027. Given that the FWA will be using the same officers as HMRC, with the same targets, it is likely that enforcement will initially follow the same approach as before. Any employers found to be non-compliant could still receive significant penalties and public naming.

Holiday pay enforcement arrives

The agency is also preparing for expected holiday pay enforcement responsibilities, with guidance, tools and processes being developed to support enforcement activity during 2027.

As holiday pay has never been enforced before, now is the time to review your processes and ensure that you mitigate any potential risks ahead of formal enquiries being opened.

The FWA will likely have a list of targets for enquiries based on HMRC data and complaints made to the Advisory, Conciliation and Arbitration Service (ACAS), so will likely be very active from April 2027.

Leveraging technology and intelligence

The FWA plans to strengthen its use of data, intelligence and technology, including open-source data scraping capabilities and enhanced management information to support a more intelligence-led approach to compliance and enforcement.

What should employers do now?

Although 2026/27 is primarily a transition year, the delivery plan highlights the direction of travel for labour market enforcement in the UK.

The integration of NMW enforcement, preparation for holiday pay enforcement, and investment in data and technology, all indicate that the FWA is focused on a more unified and intelligence-led enforcement model.

Employers should follow developments closely, particularly the publication of the agency's 2027-2030 Enforcement Strategy, which is expected to provide further detail on future priorities, measures and enforcement approaches.

Further actions for employers to ensure they could demonstrate to the FWA that their compliance systems and processes are robust include:

• Reviewing future guidance and digital tools, including the proposed payslip explainer and holiday pay calculator;
• Reviewing current NMW compliance processes ahead of the planned integration of NMW enforcement into the FWA from April 2027; and
• Monitoring the development of holiday pay guidance and enforcement processes during 2027.

How KPMG can help

KPMG’s integrated Tax, Payroll and Employment Law teams have extensive experience helping organisations to design, implement and maintain effective systems and processes for ensuring compliance with their employment obligations. Please speak to the authors, or your usual contact in KPMG in the UK, to talk through how the issues discussed in this article could impact your business.

For further information please contact:

• Clare Tomlinson
• Tom Williams