The 7th April 2026 marks a milestone in UK employment law with the official launch of the Fair Work Agency (FWA). For HR professionals, Business Managers, and trust leaders, this isn’t just another administrative change; it is a fundamental shift in how employment rights are enforced in the education sector. The FWA isn’t just a new name; it is a “super-regulator” that consolidates the powers of HMRC’s Minimum Wage team, the Gangmasters and Labour Abuse Authority, and the Employment Agency Standards Inspectorate. In this significant shift, the FWA will oversee Holiday Pay and Statutory Sick Pay (SSP), areas that were notoriously difficult to monitor previously.
In this article, we’re sharing insights into how the FWA will operate and why schools and trusts must act immediately to ensure compliance and mitigate risk.
A new era of “Proactive” enforcement
Unlike the previous system, which largely relied on individual staff members filing grievances or taking a school to an Employment Tribunal, the FWA is proactive.
No Trigger Needed: Inspectors do not need a whistleblower to visit your school. They have the power to conduct unannounced inspections or request comprehensive payroll data at any time.
The Price of Non-Compliance: If the FWA finds an underpayment, they will issue a Notice of Underpayment. This requires the school to pay all arrears plus a civil penalty of 200% of the underpaid amount (capped at £20,000 per worker). Furthermore, schools can be charged an hourly rate to cover the FWA’s investigation costs.
Why the education sector is in the spotlight
Schools and Multi-Academy Trusts (MATs) are particularly vulnerable due to the inherent complexity of education-specific contracts. The FWA is expected to focus on three “high-risk” areas:
1. Term-Time Only (TTO) Calculations
Holiday pay for TTO and casual staff remains the biggest financial risk. The FWA will be looking for strict compliance with the Harpur Trust v Brazel ruling and the subsequent 2024 regulations.
If your school or trust is still incorrectly using the “12.07%” calculation for permanent TTO staff, the 200% penalty on six years of arrears could be significantly impactful on school budgets.
2. Supply Chain Liability
Schools and trusts are now jointly responsible for the practices of the supply agencies they use.
If an agency exploits a worker or fails to pay them correctly, the FWA can inspect the entire supply chain, including your school or trust.
3. The 6-Year Paper Trail
There is now a legal requirement to keep detailed records of holiday entitlement, leave taken, and pay for six years. Failing to produce these during an inspection may be deemed a criminal offence.
Recommended actions for trust leaders & governors
To prepare your school or trust, ensuring compliance and considering the FWA’s new enforcement powers, we recommend the following steps:
- Conduct a retrospective audit: Review holiday pay for TTO staff and casual workers (like exam invigilators) going back six years. It is significantly cheaper to “self-correct” errors now than to wait for an FWA penalty.
- Check your SSP systems: Ensure your payroll software is updated for the April 2026 SSP changes (the removal of the Lower Earnings Limit and the 3-day waiting period, SSP being a day 1 Right).
The FWA is expected to run spot checks on these specific updates this month.
Takeaways
The establishment of the Fair Work Agency represents the most significant change to employment law enforcement in a generation. For schools and trusts, the transition from a “reactive” tribunal system to a “proactive” inspection regime means that payroll accuracy is no longer just an administrative task; it is a critical point of legal and financial compliance. By taking the steps to audit your data and formalise your record-keeping now, you can ensure that your institution remains focused on education rather than costly litigation.
If you have any questions following this blog, please get in touch with the team who can help.
