The Fair Work Agency and the Construction Industry: What Construction Employers Need to Know

July 9, 2026

The Fair Work Agency (“FWA”) was established under the Employment Rights Act 2025 and officially commenced operations on 7 April 2026. Its purpose is to strengthen the enforcement of employment rights, improve compliance with workplace legislation and ensure that workers receive the protections to which they are entitled. The creation of the FWA forms part of the Government’s wider initiative to improve labour market enforcement by bringing a number of existing enforcement functions together under a single body.

This development is particularly significant for employers in the construction industry. The sector is characterised by complex labour supply chains, extensive use of subcontractors and agency workers, and a workforce that often includes individuals engaged under a variety of contractual arrangements. These factors can increase the risk of non-compliance with employment legislation, particularly in relation to pay, holiday entitlement, employment status and record-keeping obligations. With the FWA expected to take a more proactive approach to enforcement, construction employers should ensure their employment practices are compliant and be prepared for increased regulatory scrutiny.

What does the Fair Work Agency do? Enforcement powers for construction employers

The FWA consolidates several existing state enforcement functions into a single organisation. This approach is intended to improve efficiency, provide consistent enforcement and create a single point of contact for both workers and employers.

The FWA has extensive investigative and enforcement powers, including:

  • Conducting workplace inspections and requiring employers to produce documents and records.
  • Imposing civil penalties for non-compliance, using powers modelled on the existing National Minimum Wage enforcement regime.
  • Bringing proceedings in the Employment Tribunal on behalf of workers in certain circumstances.
  • Investigating labour market offences and taking enforcement action against employers who breach employment legislation.
  • Requiring employers to rectify non-compliance and, in serious cases, pursuing sanctions that may result in financial penalties or criminal prosecution.
  • Recovering enforcement costs from employers where enforcement action has been necessary.

Most of the powers outlined above are already in force. However, the mechanism by which the FWA will recover its enforcement costs from non-compliant employers is yet to be finalised and will be set out in secondary regulations introduced by the Secretary of State. The FWA is expected to take a proactive approach to enforcement, focusing not only on responding to complaints but also on identifying areas of non-compliance within higher-risk sectors.

How construction companies can prepare for Fair Work Agency investigations and compliance audits

The construction sector has historically attracted significant regulatory scrutiny due to the widespread use of subcontracting, agency workers and complex labour supply chains. As a result, construction employers should expect increased attention from the FWA.

The FWA may contact employers to arrange audits, request documentation and conduct interviews with management and workers. Initially, enforcement activity is likely to focus on sectors considered to present a higher risk of non-compliance.

To prepare for increased enforcement, construction employers should:

  • Review payroll records and address any potential issues relating to wages and deductions.
  • Audit holiday pay calculations and records to ensure compliance with current legal requirements.
  • Ensure employment contracts and policies are up to date and accurately reflect working arrangements.
  • Confirm that workers can easily access information relating to their pay, working hours and annual leave entitlements.
  • Review the engagement of agency workers, self-employed contractors and other contingent labour to ensure correct employment status has been applied.
  • Train managers on key employment law obligations and record-keeping requirements.
  • Familiarise themselves with the FWA’s Enforcement Policy Statement and any published guidance.
Key takeaways for construction employers

The introduction of the Fair Work Agency represents a significant shift in the enforcement of employment rights. By consolidating enforcement powers within a single body and adopting a more proactive approach, the Government is seeking to increase compliance across all sectors.

Construction employers should take this opportunity to review their employment practices, ensure records are up to date and address any areas of potential non-compliance before scrutiny from the FWA arises.

As enforcement activity increases across the construction sector, employers should take proactive steps to review their employment law compliance and workforce management processes. Herrington Carmichael’s Employment Team regularly advises construction companies on employment status, agency worker arrangements, holiday pay compliance and wider employment law issues. If you would like advice on preparing for Fair Work Agency enforcement or reviewing your current practices, please contact us for specialist support.

Isabella Milnes-James
Solicitor, Employment
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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