A New Government Agency Launches April 7 — And Hospitality Is Its First Target

On April 7, 2026, a new government enforcement body formally comes into existence. Most UK hospitality operators have never heard of it. By the end of this week, it will have the power to walk through your front door without warning.

The Fair Work Agency is not a rebranding exercise. It is a standalone statutory body, created under the Employment Rights Act 2025, with powers that meaningfully exceed anything HMRC's National Minimum Wage team had before. And hospitality — pubs, restaurants, hotels, cafés, catering companies — has been explicitly named as its primary enforcement focus for year one.

You have 7 days. Here is what you need to know.

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What Is the Fair Work Agency?

The Fair Work Agency replaces HMRC's NMW compliance and enforcement team. But its mandate is significantly broader.

Where HMRC only enforced wage rates, the FWA has been given authority over three areas:

• National Minimum Wage (NMW) and National Living Wage (NLW) compliance
• Statutory Sick Pay (SSP) — a power HMRC never held
• Holiday pay — including the 52-week reference period records that became legally mandatory on April 6

The agency was established by a government that explicitly described under-enforcement of employment rights as a "systemic failure." The FWA is the institutional response.

Its chair is Matthew Taylor, who authored the Good Work Review — the foundational government analysis of employment standards in the gig economy. This is not a token appointment. Taylor spent years arguing that enforcement lacked teeth. Now he chairs the body that provides them.

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The Walk-In Power — This Is New

Under existing HMRC processes, compliance checks were typically triggered by complaints and involved prior correspondence.

The FWA operates differently.

FWA inspectors can:

• Enter business premises and inspect payroll records, rotas, and payment documentation without prior warning
• Issue enforcement notices directly, without requiring a tribunal referral
• Commence investigations based on sector intelligence, not just individual complaints

This means a pub in Manchester or a hotel in Brighton can receive an unannounced visit based on nothing more than being in an industry the FWA has flagged as high-risk.

Hospitality is that industry.

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Why Is Hospitality the Primary Target?

The FWA's year-one focus on hospitality is not random. It reflects documented enforcement gaps across three specific issues:

1. National Living Wage — Now £12.71/Hour

The NLW rose to £12.71/hour on April 1, 2026. In hospitality, underpayment typically doesn't come from paying the wrong base rate — it comes from practices that effectively reduce take-home below the threshold.

The FWA will specifically examine:

• Unpaid pre-shift setup time — briefings, till counts, uniform changes before the clock starts
• Service charge deductions that bring effective hourly pay below NLW
• Tip allocations that haven't been fully passed to workers
• Accommodation deductions above the permitted offset (£11.10 per day in 2026/27)

The penalty for underpayment: you repay the worker in full, plus a 200% penalty surcharge to the government. On £1,000 of underpayment per worker, that's £2,000 to the FWA plus the £1,000 back-payment. Maximum penalty: £20,000 per worker.

2. Holiday Pay for Zero-Hours and Variable-Hours Workers

Hospitality employs more zero-hours and variable-hours workers than any other sector. Under the 52-week reference period rule — now a legal requirement — variable holiday pay must be calculated using the average pay over the 52 weeks the worker actually worked in the previous year.

Most hospitality operators have not been tracking this correctly. Until April 6, there was no legal obligation to maintain the records. From April 6, failing to keep adequate records is a criminal offence.

The FWA can audit your holiday pay records retrospectively.

3. SSP — The Power HMRC Never Had

From April 6, Statutory Sick Pay is a day-one right. The 3-day waiting period is abolished.

More significantly: the FWA can now investigate and enforce SSP compliance directly. Previously, an employee who believed they'd been underpaid SSP had to take their employer to an Employment Tribunal. The FWA can now intervene without waiting for a complaint.

For a hospitality business with high turnover and irregular attendance patterns, SSP compliance requires:

• Up-to-date absence records
• Correct calculation of the weekly rate (£116.75 in 2025/26)
• Evidence that eligible employees were paid from day one of absence (from April 6)

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What the FWA Launch Means in Practice

The FWA isn't just taking over HMRC's desk and phone number. It is being resourced as a standalone enforcement body with its own inspectorate.

HMRC's NMW team has historically conducted around 2,000 investigations per year. The FWA has a significantly larger budget allocation and an explicit remit to increase both the volume and visibility of enforcement.

This week, HMRC published its final NMW enforcement round before the handover: 400 UK employers named, £7.3 million in unpaid wages. The FWA will conduct equivalent naming exercises — but with greater frequency and a public register that doesn't disappear after 12 months.

The reputational damage from an FWA naming is likely to be more durable than anything HMRC managed. If your restaurant is on a public FWA enforcement register, that appears in Google searches alongside your reviews.

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The Tipping Complication

There is an additional dimension specific to hospitality that most operators haven't factored into their FWA risk assessment.

Phase 2 of the Employment (Allocation of Tips) Act 2023 takes effect on October 1, 2026. The government consultation on Phase 2 closed on April 1, 2026 — which means the rules are now locked in.

From October 1:

• Every hospitality employer must have a formal written tipping policy
• The policy must have been developed with genuine staff consultation
• Three years of tip allocation records must be available on request to any current or former employee
• Workers can bring an Employment Tribunal claim with no financial cap on awards

The FWA will enforce tip allocation compliance alongside NMW enforcement. An inspector arriving to audit your minimum wage compliance will also be entitled to ask to see your tipping policy.

If you haven't written one: you have 6 months. But the consultation requirement means you cannot write it the week before the deadline — you need documented staff involvement in the process.

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The 5-Point FWA Readiness Checklist

1. Update your payroll for NLW at £12.71/hour

All workers aged 21 and over must be at the new rate from April 1. Workers aged 18–20: £10.85/hour. Under 18: £7.55/hour.

Check: has your payroll software been updated for every age band, or just the headline NLW figure?

2. Audit your effective hourly rates

Calculate actual take-home for your lowest-paid workers after any deductions. Include the value of any accommodation offset. Verify that pre-shift briefings are either paid or ended before the worker clocks in.

3. Prepare your SSP records

From April 6, every eligible absence — from day one — must be documented and SSP-eligible workers paid. Update your absence management system and brief your managers.

4. Build your holiday pay records

Start maintaining the 52-week reference period data now. For variable-hours workers, this means recording not just hours worked but weekly pay across the year. FWA has retrospective enforcement powers back to December 2025.

5. Start your tipping policy

You have 6 months before it's mandatory. Start now: draft a policy, hold a staff meeting, take notes of the discussion. This takes two hours and protects you from tribunal exposure that has no cap.

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A Note on the 200% Penalty

The FWA's penalty structure is significantly more punitive than the historical HMRC approach.

If an FWA investigation finds NMW underpayment, the employer must:

1. Repay 100% of the underpayment directly to the affected worker(s)
2. Pay an additional 200% of the underpayment as a civil penalty to the FWA
3. Be named on the public enforcement register

On a payroll of 20 workers where each was underpaid by £500 over the year, that is:

• £10,000 back to workers
• £20,000 civil penalty
• £30,000 total, plus the reputational damage of public naming

This is not a hypothetical. 400 employers were named in HMRC's final round this week. The FWA will not be less active.

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TL;DR

• The Fair Work Agency launches April 7 with walk-in premises powers and no prior warning requirement
• Hospitality is explicitly its primary enforcement sector for year one
• Enforcement covers NMW, SSP, and holiday pay — broader than HMRC could manage
• The penalty for NMW underpayment is 200%: you repay the worker twice
• You have until April 7 to audit your NLW rates, pre-shift practices, SSP records, and holiday pay calculations
• From October 1, a written tipping policy is also mandatory and the FWA will enforce it

The FWA isn't going to send warnings. It's going to send inspectors.

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Stay Ahead of FWA Enforcement

ComplianceAlert monitors FWA announcements, enforcement notices, and sector guidance the moment they're published — and sends you a plain-English summary before your competitors have read their emails.

Not sure where you stand right now? Take our free 3-minute Compliance Score quiz — instant results, no sign-up: compliancealert.co.uk/compliance-score

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