6 Days Until FWA Launches. Here's Why Care Homes Are the Highest-Risk Sector in the UK

The Fair Work Agency (FWA) launches in six days — on April 7, 2026. It has walk-in powers, no requirement to give advance notice, and the authority to investigate National Minimum Wage, holiday pay, and Statutory Sick Pay all in one visit.

The care sector is its primary target.

This isn't speculation. Both BDO and Lewis Silkin published care-sector-specific FWA warnings in the week of March 24, 2026. HMRC's own data — which FWA inherits — shows the care industry has the highest rate of NMW underpayment of any sector in the UK.

If you run a care home, manage a care agency, or sit on the board of a care group, here is what you need to know before Tuesday.

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What Is the Fair Work Agency?

The Fair Work Agency is a new enforcement body created under the Employment Rights Act 2025. It formally launches April 7, 2026.

FWA consolidates enforcement functions previously held by:

• HMRC's National Minimum Wage compliance team
• HMRC's holiday pay enforcement function
• The Gangmasters and Labour Abuse Authority (GLAA)

What's new: Previously, NMW, holiday pay, and SSP were enforced by separate teams in separate departments. An employer underpaying on NMW might be contacted by one team and never hear about their holiday pay liability. FWA changes that. One investigation covers all three — simultaneously.

Walk-in powers: FWA officers can visit an employer without prior notice. They can request any pay records from the previous six years. They can interview workers directly.

Penalties: The penalty for NMW underpayment is 200% of the underpaid amount, capped at £20,000 per worker. If you have 10 workers each underpaid by £2,000, that's a £40,000 penalty — plus mandatory repayment of the underpaid wages.

The FWA will also maintain a public naming list. Being named is a reputational hit that affects CQC ratings, recruitment, and local authority contracting.

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Why Care Is the Primary Target

HMRC's 2024 NMW enforcement report identified care as the sector with the highest rate of NMW underpayment in the UK. The reasons are structural — care has three pay traps that create NMW violations even when employers believe they're compliant:

1. Sleep-In Shift Rates

Many care homes pay a flat rate for sleep-in shifts — commonly £30–£60 per shift, irrespective of shift length. Following Supreme Court cases and HMRC guidance, sleep-in workers are entitled to NMW for hours they are required to be present and available, not just hours they are called upon.

If your sleep-in rate divided by shift hours falls below £12.21/hour (the NMW rate before April 1), you are likely underpaying. From April 1, the rate rises to £12.71/hour.

Example: A 9-hour sleep-in shift paid at £50 = £5.56/hour. NMW violation. Potential back-liability across the workforce, potentially for years.

2. Travel Time Between Community Care Clients

For community care workers and domiciliary care agencies, time spent travelling between client visits is working time under the Working Time Regulations and must be paid at NMW rates.

Many agencies pay workers only for time spent "on client" — zero pay for travel. This is an NMW violation for every worker affected, for every visit, over up to six years.

3. Accommodation Deductions

For live-in care arrangements, employers can make deductions for accommodation up to a maximum set by the government. The current accommodation offset is £70.49/week (2025/26 rate).

Any accommodation deduction exceeding this limit reduces effective hourly pay below NMW. This affects live-in carers and any residential arrangement where accommodation is provided.

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What One FWA Investigation Looks Like

Under HMRC, an NMW investigation might take 12–18 months and focus on one issue. Under FWA, the process is faster and broader.

An FWA visit could proceed as follows:

1. FWA officer arrives unannounced with warrant authority
2. Requests pay records for all workers for the last six years
3. Interviews a sample of workers (without management present)
4. Identifies discrepancies in NMW compliance, holiday pay accrual, and SSP payments
5. Issues enforcement notice covering all three simultaneously
6. Penalty notice issued: 200% of underpayment per issue

For a care home with 50 employees, even modest underpayments across sleep-in rates and travel time could produce a six-figure penalty.

The Advisory, Conciliation and Arbitration Service (ACAS) has updated its employer guidance for FWA's launch. BDO Healthcare and Lewis Silkin have both published sector-specific briefings warning of the care sector's elevated risk.

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The 200% Penalty: Real Numbers

Let's model a mid-size care home — 40 care workers, some sleep-ins, some community visits.

Scenario A: Sleep-in underpayment only

• 10 workers doing sleep-in shifts at £45/9hr = £5/hour vs £12.71 NMW = £6.93/hour shortfall
• Weekly: £6.93 × 9hrs × 10 workers = £623.70/week
• Annual: £32,432
• Over 3 years: ~£97,000 back-pay + 200% penalty = £290,000 total liability

Scenario B: Travel time only

• 15 community workers, 1 hour travel per day, 5 days/week
• Annual: 15 × 260hrs × £12.71 = £49,569 underpaid per year
• Over 2 years: £99,138 + 200% penalty = £297,000 total liability

These are not extreme scenarios. They represent care homes operating exactly as many currently operate.

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What To Do Before April 7

You have six days. Here is the priority list:

1. Audit sleep-in rates immediately Calculate effective hourly rate for every sleep-in shift type. If any come in below £12.71/hour, you need to:

• Increase the rate to at least NMW level, and
• Assess your back-liability for the last six years

2. Review travel time policy for community care If you operate community care, domiciliary, or outreach services:

• Are workers paid for travel between clients?
• If not, calculate the liability and take legal advice before FWA launches

3. Check accommodation deductions For live-in arrangements, verify deductions don't exceed £70.49/week (2025/26 limit)

4. Prepare your records FWA can request six years of pay records. Make sure yours are:

• Complete and accessible
• Consistent with your stated policies
• Supported by worker contracts

5. Run a compliance score check Not sure where you stand overall? Take our free 3-minute Compliance Score quiz — instant results, no sign-up required.

👉 compliancealert.co.uk/compliance-score

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PLUS: Care Homes Now Face Triple Regulatory Risk

FWA adds a third enforcement body to the care sector's compliance landscape:

Body	What it covers	Power
CQC	Care quality, staffing, systems	Civil — ratings, closure, conditions
HSE	Health & safety at work (including care delivery systems)	Criminal — prosecution, unlimited fine
FWA (from April 7)	NMW, holiday pay, SSP	Civil penalty — 200% underpayment + naming

Each operates independently. A clean CQC rating doesn't shield you from an HSE prosecution or an FWA penalty notice. You need to be clean across all three.

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How ComplianceAlert Helps

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• FWA publishes new enforcement guidance or campaigns
• NMW or holiday pay rules change
• CQC updates its inspection framework
• HSE announces care sector enforcement priorities

So you know what's coming before it arrives at your door.

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FAQs

When does the Fair Work Agency start? April 7, 2026. It replaces HMRC's NMW and holiday pay enforcement teams and takes on expanded powers including SSP enforcement.

Can FWA visit my care home without warning? Yes. FWA officers have walk-in powers and can request pay records going back six years.

What is the penalty for NMW underpayment? 200% of the underpaid amount, up to £20,000 per worker, plus mandatory repayment of wages owed. Employers can also be publicly named.

Is the care sector really the highest risk? Yes. HMRC data from the most recent NMW enforcement report identifies social care as having the highest NMW non-compliance rate of any sector in the UK, primarily due to sleep-in shift rates, travel time, and accommodation offset issues.

What's the sleep-in rate minimum from April 1? The National Living Wage for workers aged 21+ rises to £12.71/hour from April 1, 2026. Sleep-in shifts must be paid at or above this rate.

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Published March 2026. ComplianceAlert monitors the Fair Work Agency, CQC, HSE, and employment law for UK care providers. Sources: BDO Healthcare FWA briefing (March 2026), Lewis Silkin employment law bulletin (March 2026), HMRC NMW enforcement report 2024, gov.uk Fair Work Agency guidance, ACAS.

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