The Fair Work Agency is now live!
The Fair Work Agency is officially live as of April 7th. This independent body consolidates several entities and aims to ensure employee rights are enforced. It will focus on the National Minimum Wage, agency worker protections, gangmasters' licensing, elements of modern slavery, SSP, and holiday pay.
They have the power to audit your holiday pay records for the last 6 years and issue 200% penalties on the spot. Is your business an easy target, or are you protected?"
3 High-Risk Areas
The "Look-Back" Power (Holiday Pay)- The FWA now has the authority to investigate holiday pay underpayments dating back six years. If your records for irregular hours or "rolled-up" holiday pay aren't perfect, the financial exposure could be massive.
Immediate Financial Penalties- Unlike previous systems that offered a "support stage" to fix mistakes, the FWA can move straight to enforcement. Penalties are now set at 200% of the underpayment (up to £20,000 per worker).
New Record-Keeping Duty- As of April 2026, employers have a statutory duty to keep detailed annual leave and holiday pay records for six years. The FWA can enter your premises, inspect computers, and seize documents to verify these records.
The FWA doesn't care if a mistake was accidental. They only care if the record exists!
The Solution: Contact me for an audit of your records; let’s ensure your records are airtight before an inspector knocks.
What the Audit Specifically Reviews
Our audit would focus on these key areas of the 2026 legislation:
Holiday Pay Records (The "Adequacy" Test):
The FWA requires "adequate" records for six years. An audit checks that you have preserved not just the final payment, but the calculation methodology (especially for variable-hours workers, where commission and overtime must be included).
It ensures you have logged carry-over leave and payments made in lieu of leave upon termination.
SSP Transformation:
Since the 3-day waiting period was removed on April 6, 2026, our audit reviews your systems to ensure Day 1 Statutory Sick Pay is being triggered correctly for all employees, including those previously below the Lower Earnings Limit.
The "Look-Back" Risk:
The FWA has the authority to investigate historical underpayments. An audit identifies "red flag" patterns in your historic data—such as miscalculated "normal remuneration".
Data Retrievability & Security:
Our audit confirms that your records are not just stored, but accessible. If the FWA requests a report, you must be able to produce it without "unnecessary delay."
Why It’s a "Strategic" Audit (Not Just Admin)
At MGW People, we view this audit as a commercial tool. Failure to pass an FWA inspection now carries unlimited financial penalties and a potential criminal offence charge for failing to keep adequate records.
The Outcome of the Audit
Upon completion, you receive a remedial roadmap. This allows you to:
Fix historical errors voluntarily (often avoiding the 200% penalty).
Update your HRIS/Payroll software or processes to automate the 6-year retention.
Protect the "Psychological Contract" with your team by ensuring they are paid correctly and ethically.
Maria’s Top Tip: "The FWA is focusing on 'persuasion through compliance' in 2026 before full enforcement in 2027. This audit is your window of opportunity to clean the slate and secure your business's future."
Please get in touch if you have any queries or would like to work together to future proof your business.
