The Fair Work Agency Launches in 6 Days — And Care Homes Are First in the Crosshairs

The Fair Work Agency (FWA) formally launches on 7 April 2026. The care sector has been confirmed as its primary enforcement target. If you run a care home, domiciliary care service, or supported living provider, you have six days to understand your sleep-in shift liability — before HMRC's successor enforcement body starts inspecting your records.

This post breaks down exactly what the FWA is, why care homes are its first priority, what the sleep-in NMW issue actually means in practice, and what you need to check before April 7.

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What Is the Fair Work Agency?

The Fair Work Agency is the UK government's new consolidated employment rights enforcement body. It brings together:

• HMRC's National Minimum Wage enforcement team
• The Employment Agency Standards Inspectorate
• The Gangmasters and Labour Abuse Authority (GLAA)

These bodies previously operated separately, with different powers, priorities, and enforcement styles. The FWA merges them into a single agency with expanded powers, a higher profile, and — critically — a sector-specific enforcement strategy.

The FWA was created by the Employment Rights Bill and formally established under the Fair Work Agency Act 2026. It launches in 6 days, on 7 April 2026.

Why Is Care First?

Multiple independent sources — including BDO, CareSyncExperts, and sector legal advisers — have confirmed that adult social care is the FWA's primary enforcement focus at launch.

The reasons are well-documented:

1. High workforce turnover creates gaps in payroll records
2. Sleep-in shifts generate complex NMW calculation questions that many operators have never properly resolved
3. Historic arrears from the Mencap v Tomlinson-Blake period may still be outstanding
4. Thin margins mean some providers have delayed NMW compliance as a cost-saving measure
5. Low awareness of the FWA's scope among care home managers and owners

The FWA knows this. That's why care is first.

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The Sleep-In Shift Problem Explained

If you employ care workers who sleep on-site and are on-call overnight, you have a sleep-in shift compliance question that you must answer before FWA inspectors arrive.

The Legal Background

For years, there was genuine legal uncertainty about whether sleep-in shifts counted as "working time" for NMW purposes. Workers argued they should be paid the full NMW rate for every hour they were on-site. Employers argued that sleeping time — time when nothing was required of them unless called upon — was not the same as active working time.

The Supreme Court settled this in Mencap v Tomlinson-Blake [2021]. The ruling confirmed that sleep-in shifts do not automatically qualify as NMW working time where the worker is genuinely permitted to sleep and is only required to respond to exceptional circumstances.

That is the current legal position. However, the practical compliance picture is more complicated.

What FWA Inspectors Will Look For

FWA enforcement officers will examine three things:

1. Whether your sleep-in arrangements actually meet the Mencap criteria.

The Mencap ruling is not a blanket exemption. It applies where workers are "permitted to sleep" and where interventions are genuinely exceptional. If your workers are regularly woken up, respond to call bells frequently, perform medication rounds during their shift, or are otherwise substantially engaged during sleep-in hours — the Mencap exemption may not apply to your service.

Inspectors will look at rotas, incident logs, and worker statements to assess actual sleep-in practice.

2. Whether you have resolved any historic arrears from pre-2021.

Before the Mencap ruling, many providers were receiving HMRC enforcement notices for sleep-in shift arrears. Some paid. Some appealed. Some settled. Some did nothing. FWA will ask what you did about pre-Mencap liability, and whether any settled arrears are reflected in current payroll records.

3. Whether your NMW calculation is correct for the rest of the shift.

Even where the sleep-in period itself is excluded, workers must be paid NMW for all non-sleeping time. Errors in calculating shift breaks, handover periods, and travel time between visits are common in care sector payroll — and all of these can constitute NMW underpayment.

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The Rolling-Up Risk

A specific practice FWA will examine is rolling up of NMW obligations into a flat shift rate.

Some care providers pay a single flat rate for a sleep-in shift (e.g., £60 for a 10-hour shift) without breaking down sleeping time and waking time. If that flat rate does not result in the worker being paid NMW for all non-sleeping hours, it constitutes underpayment — even if the total looks adequate on paper.

FWA inspectors are experienced at identifying rolled-up arrangements and calculating the actual hourly rate paid across non-sleeping time.

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The October 2026 Tribunal Window Change

Here is the piece of the picture that most operators have entirely missed.

From October 2026, the employment tribunal limitation period for NMW claims doubles from 3 months to 6 months. ACAS early conciliation deadlines will extend to 12 weeks correspondingly.

This means that arrears arising from FWA inspections in April-October 2026 will be claimable at tribunal for twice as long. Historic arrears that workers have previously not pursued — because the window passed — may become live claims again as the new 6-month window applies to future periods.

For care providers with high workforce turnover, this materially increases exposure. Workers who left in the spring of 2026 will have until October to bring NMW claims. Workers who leave after October will have 6 months from departure.

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The New Unfair Dismissal Cap

While we're on employment liabilities: the unfair dismissal compensation cap increased on 6 April 2026 to £123,543 under SI 2026/310. This is the highest cap ever set.

For care providers who might be tempted to manage out workers raising NMW concerns or cooperating with FWA inspectors, this is not a path worth taking. Whistleblower protection and automatic unfair dismissal claims are both available in NMW enforcement contexts — and the compensatory award is now uncapped for automatically unfair dismissal.

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Your Sleep-In Compliance Checklist

Use this checklist before April 7. If you can answer yes to all of these, you're in a defensible position. If you can't, you need to act now.

Shift structure:

• Sleep-in arrangements are documented in writing (contract, policy, or rota notes)
• Workers are genuinely permitted to sleep and not routinely required to work during sleeping time
• Incident and intervention logs are maintained (showing actual frequency of interruptions)
• Waking time is identified separately from sleeping time on rota/timesheets

Payroll:

• All non-sleeping hours in a sleep-in shift are paid at or above NMW rate
• No rolled-up flat rates that result in below-NMW hourly pay for non-sleeping time
• Pay records are kept for at least 3 years (FWA can inspect 3 years' records)
• Any NMW corrections from previous years are documented

Historic arrears:

• You have reviewed whether any pre-2021 HMRC enforcement notices remain outstanding
• Any arrears identified during the legal uncertainty period have been resolved or documented

Governance:

• Your HR/payroll team knows the Mencap criteria and can explain your compliance position
• You have a named person responsible for NMW compliance
• You know what to do if an FWA inspector makes contact (call your HR adviser immediately, before cooperating)

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What Happens If FWA Finds Underpayment

Under HMRC's previous enforcement regime (which the FWA inherits), the consequences of NMW underpayment were:

• Arrears notice — employer must pay all underpaid wages plus interest
• Penalty notice — up to 200% of arrears, minimum £100, maximum £20,000 per worker
• Public naming — HMRC's quarterly naming list has included care providers previously
• Tribunal claims — workers can bring Employment Tribunal claims independently of FWA enforcement

The FWA has the same powers. It also has more resources, a clearer sector mandate, and — unlike the previous fragmented enforcement system — the GLAA's powers to investigate labour exploitation across the supply chain. Agency workers, umbrella companies, and self-employed care staff are all within scope.

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CQC Link: Don't Forget the Dual Regulatory Risk

FWA enforcement doesn't operate in isolation. CQC's new sector-specific inspection frameworks — currently in consultation until 12 June — include a new Workforce Wellbeing and Enablement quality statement. Evidence of NMW underpayment, worker complaints about pay, or FWA enforcement action will be available to CQC inspectors.

A service that receives an FWA enforcement notice in April 2026 may find itself under CQC scrutiny by the summer. The two enforcement regimes reinforce each other in ways that many operators haven't fully mapped.

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What You Should Do This Week

1. Pull your sleep-in shift records for the last 3 years. Know what they show.
2. Calculate the actual hourly rate your workers receive for non-sleeping time in sleep-in shifts. If it's below NMW, fix it before April 7.
3. Review your payroll records for any rolled-up rates. Split them into sleeping and waking components.
4. Brief your management team on what to do if an FWA inspector makes contact. The answer is: take their details, say you will cooperate fully, and call your HR adviser before anything else.
5. Document your compliance position — even a one-page policy note saying "our sleep-in shifts meet the Mencap criteria because..." is worth having.

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TL;DR

• FWA launches 7 April 2026 — 6 days from now
• Care sector is confirmed as the primary enforcement target
• Sleep-in shifts: the Mencap ruling provides protection, but only if your arrangements genuinely qualify — inspectors will check
• October 2026: Employment tribunal window doubles to 6 months — extending your arrears exposure
• Unfair dismissal cap: £123,543 under SI 2026/310
• Use the compliance checklist above before April 7
• 5 care providers in special measures in March 2026 alone — CQC enforcement is also accelerating

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