Purpose and function
The Fair Work Agency launches in April 2026. It will focus on minimum wage, holiday pay, statutory sick pay and supply chain compliance. This agenda extends well beyond HR and into finance, procurement and board oversight.
Key powers and impact
The Agency will be able to investigate without a Tribunal claim. It will be able to compel the production of documents, enter premises, issue compliance notices, impose financial penalties, and pursue criminal sanctions in serious cases. It will also publish employer names. Financial exposure matters: reputational exposure often matters more. Investors, customers and employees will draw their own conclusions quickly.
Supply chain compliance
It will cover how labour is sourced, paid and treated by contractors, subcontractors, agencies and outsourced service providers. In practice, that often includes facilities management, logistics, construction, cleaning, hospitality, care, tech contractors and umbrella company arrangements.
Under the new enforcement model, regulators will not stop at your employment contracts. They will ask:
- Are workers in your supply chain paid at least the minimum wage?
- Is holiday pay calculated correctly?
- Are agency and umbrella workers lawfully engaged?
- Is there evidence of exploitation or unlawful deductions?
- Do you conduct proper right-to-work checks?
If a contractor underpays staff while providing services to you, the Agency may scrutinise your oversight. If you knew, or should have known, that labour costs were unrealistically low, that would become uncomfortable quickly.
Reputational damage tends to land on the brand at the top of the chain, not the small subcontractor three layers down.
From a governance perspective, supply chain compliance means you can show:
- due diligence before appointment
- clear contractual protections
- ongoing monitoring, not just a signed policy
- a mechanism to escalate concerns
- action when red flags appear.
Governance
The real risk sits in governance. Many breaches arise from systems, not intent. Payroll configurations drift. Holiday pay calculations exclude regular overtime. Contractors look independent on paper but operate like employees in practice. Agency workers fall between responsibilities. Each decision may look rational in isolation. Together, they create exposure.
What should you consider?
Evidence
Can you show how you calculated pay and why you classified individuals as you did?
Accountability
Who owns compliance throughout group entities and supply chains?
Escalation
How quickly does bad news reach the board?
What should you do?
Audit trails
Demand clear audit trails for pay and status decisions. Someone must own compliance throughout entities and outsourced arrangements. Document the rationale, test assumptions and fix issues early.
Close gaps
Compliance failures usually arise from siloed decision-making. Finance adjusts pay models. Operations reshape contractor use. HR updates policies. Without board oversight, gaps appear. Map the risk, assign ownership and ensure rapid escalation.
