Working Lives report signals Fair Work Agency's enforcement focus for UK contingent labour market

A landmark final report commissioned by the former Office of the Director of Labour Market Enforcement for the newly established Fair Work Agency’s (FWA) has put hard data behind what many have long suspected: breaches of basic employment rights are widespread and concentrated in parts of the labour market that rely heavily on agency workers, "umbrella" models and lower‑paid platform or self‑employed work.

The report, "Working Lives: the scale and nature of labour market non‑compliance and work‑based harms in the UK", is designed as the baseline evidence set for the FWA's first strategy under the Employment Rights Act 2025. Its findings will influence how the new agency, which was launched in April, prioritises sectors, business models and enforcement activity through to and beyond its first strategy in 2027. 

The report sits alongside the government’s consultation on modernising the regulatory framework for agency work, including umbrella companies and referral fees, which closed on 1 May and seeks to provide the empirical context for any legislative changes that follow.An updated FWA enforcement statement published on the 19 May has also set out the extensive civil and criminal enforcement powers of the Department for Business and Trade's new executive agency for upholding labour market legislation and worker protection.

The Working Lives report findings provide useful insight into the direction that this FWA enforcement activity will take and clearly signal to agencies, umbrella companies and platforms the importance of evidencing supply chain engagements and payments and of ensuring that self-employed engagements are genuinely defensible. Sellers should be prepared for more focus on these areas in sale and investment due diligence. 

Baseline map

The Working Lives report is based on a large, bespoke survey running from the spring and summer of 2023 to the same period in 2025, plus in‑depth interviews and focus groups. It focuses on more “precarious” workers: for example, those on low incomes, working via agencies or platforms, in multiple jobs, in small workplaces or from more vulnerable demographic groups.

The research looks at four main areas: compliance with the National Minimum Wage (NMW), standards in the employment agency sector, licensing of labour providers and more serious labour exploitation

The new FWA is now responsible for enforcement and analysis in all four areas, making the report its baseline “map” of current issues and its reference point for how any reforms to agency work are targeted and enforced.

How widespread is non compliance?

The Working Lives team is conservative in how it labels something a legal breach: it only records a “clear violation” where the data is strong enough. Even on that approach, the picture is stark.

Looking at four basic entitlements – payment at or above the NMW (for employees), regular payslips, receiving contracts or key information documents (KIDs) on time, and the ban on work‑finding fees for agency workers – around 14% of the whole workforce and 26% of precarious workers experienced at least one clear legal violation in the two years before the survey. In absolute terms, that equates to around 5.4-5.8 million workers and is explicitly described as a lower‑bound estimate.

Widening the lens to cover a broader set of problems, including potential breaches and clearly harmful practices, around seven in 10 workers experienced at least one such problem over the two‑year period, and around one in 10 experienced four or more. Qualitative evidence shows that many workers never raise issues externally, suggesting that formal complaints are “just the tip of the iceberg”.

For contingent workforce models, this matters because agency workers, gig and platform workers and lower‑paid self‑employed individuals are heavily represented in the “precarious” group where problems are most concentrated. These are exactly the models under review in the agency‑work consultation.

Enforcement direction

Working Lives covers the whole workforce, but it clearly signals that the FWA's main focus is to protect workers towards the bottom of the pay scale, rather than higher‑paid contractors who generally have more bargaining power. This enforcement focus is backed up in the enforcement statement that confirms that the FWA, "will ensure enforcement is proportional to breaches of employment legislation to secure compliance with the law. Achieving compliance may include intervention, based on the degree of risk or harm to workers by the employer, or a proportionate mechanism to correct non-compliance".

In practice, that points towards  agency workers and umbrella employees on or near the minimum wage, and lower‑paid platform and self‑employed workers whose effective pay drops towards minimum wage once unpaid time and deductions are taken into account

While higher‑paid contractor models, including personal service companies (PSCs) and consultancy‑type arrangements, remain within the scope of the FWA's regulatory review, especially where there are signs of sham self‑employment and systemic non‑compliance. Working Lives suggests that the FWA’s initial enforcement push will concentrate on lower‑paid, precarious and multi‑party arrangements,  exactly the target of the agency‑work consultation.

Pay and deductions 

The report estimates that about 6% of employees in the full workforce and 15% of employees in precarious work are being paid below the NMW or National Living Wage. This is several times higher than earlier headline estimates based on standard data sources, underlining how underpayment is significantly under‑recorded. Typical losses are greater among certain immigration groups and among “non‑traditional” workers, including many agency and platform workers.

Around 14% of the overall workforce and 22% of precarious workers report deductions they regard as unfair, ranging from ongoing costs such as fuel, insurance and equipment to one‑off charges such as uniforms, admin or “set‑up” fees. Three in 10  workers report working extra hours without pay, with precarious workers giving away a greater share of their time. 

From an enforcement perspective, this points to systemic erosion of income at the lower end of the market and not just isolated technical breaches.

Documentation gaps in supply chains

Basic documentation is often missing or late. In contingent worker supply chains, missing or incomplete payslips, contracts, assignment schedules  and KIDs make it much harder for workers to understand how they are paid, to spot unlawful deductions and to enforce rights.  Missing documentation also makes it harder for end users and regulators to see what is happening in complex arrangements involving agencies, umbrellas, managed service providers (MSPs) and platforms. 

Umbrella arrangements still exist where there is no contract between the agency and the umbrella and where umbrella workers are paid on the strength of a timesheet, with no clear assignment schedule and, in some cases, no contract between the umbrella and the worker. This is exactly the kind of opacity Working Lives highlights and that the agency‑work consultation aims to tackle.

Work-finding fees and transparency

The report's “deep dive” on agency workers highlights two issues. First, while only a minority of precarious workers report being paid via an umbrella or other third‑party, a significant number are unsure who actually pays them. Second, around a quarter of agency workers report paying fees to agencies of some kind, most commonly for access to work. Even on a narrow definition of unlawful work‑finding fees charged by UK‑based agencies, the report still finds 7% of agency workers in the full workforce and 12% in precarious work paying such fees. This is not an offshore problem: it is domestic non‑compliance at scale.

Umbrellas are not analysed in detail, but the combination of third‑party payers, multiple deductions and poor visibility is familiar. The agency‑work consultation directly addresses these themes, with proposals to bring umbrella companies within clearer scope, tackle referral fees and kickbacks, and simplify and update the agency rules. Any reforms that emerge are likely to be reinforced by, and operationalised through, the FWA’s enforcement strategy.

Platforms, self employment and vulnerability

Working Lives also sheds light on self‑employed and platform workers. Around 40% of self‑employed respondents say their work is enabled by a website, platform or app. Most say they can set or negotiate their own fees; only a minority report that rates are set by the platform. Many give positive reasons for working in this way, but around one in 10 say they do so because they have no better alternative.

Taken together with the wider data on underpayment, deductions and documentation gaps, this suggests that parts of the lower‑paid self‑employed and platform workforce face similar harms to lower‑paid agency workers, often with less formal protection. The key message for platforms and clients is that formal autonomy over rates does not remove vulnerability: what matters is who really controls access to work, how deductions operate, and how easy it is for workers to understand and enforce their rights.

Practical implications

For end users, MSPs, agencies, umbrellas, platforms and investors, three practical themes stand out.

Documentation and transparency are core requirements. A clear contracting structure and indication of who contracts with whom at each point in the chain is a basic expectation. This includes, written contracts between all links, and for agency workers, clear work‑seeker terms, assignment particulars and KIDs. 

Payslips should be itemised and intelligible, reconciling to the assignment rate and explaining all deductions. If, as seems likely, the agency‑work consultation leads to clearer regulation of umbrellas and supply‑chain payments, businesses that have already tightened documentation and transparency will be significantly better placed.

Self‑employed engagements will need to be genuinely defensible. Well‑structured, genuine self‑employment with real autonomy and financial risk will generally sit outside the core focus of FWA enforcement, which is aimed at lower‑paid, more dependent workers. 

By contrast, borderline self‑employment at lower rates is more likely to attract regulatory attention. There is a growing incentive for stress‑testing self‑employed contracts and working practices and for considering whether some roles, particularly nearer minimum wage, should in fact be structured as worker or employee roles. Clear, defensible self‑employment will also help businesses understand which parts of their model are likely to fall within any future extension of agency‑style regulation (for example, to umbrellas) and which sit clearly outside.

And more focus can be expected on sale and investment due diligence. The Working Lives report's spotlight on the most likely areas for FWA enforcement will drive more due diligence focus from buyers and investors on minimum‑wage compliance, deductions, agency and umbrella practices, especially work‑finding fees and supply‑chain payments, and the quality of documentation. Selling compliance as an asset of the business is already a differentiator in a buyer's market.  Contingent workforce businesses need to be able to alleviate clearly and quickly any concerns a buyer might have about regulatory challenge or tax liability, Any changes following the agency‑work consultation are likely to sharpen these questions further, as counterparties look not just at current compliance but at the resilience of the model under a modernised framework.

Osborne Clarke comment

The Working Lives report, taken together with the Fair Work Agency and the ongoing agency‑work consultation, marks a turning point in how contingent labour models are viewed. It puts hard data behind something many in the industry already know: in the parts of the market most reliant on agency, umbrella and lower‑paid platform work, basic rights are being breached at scale. That makes it much harder to sustain the idea that problems are confined to a few “rogue” operators.

For our clients, the real shift is practical. The direction of travel is towards model‑focused, evidence‑based scrutiny of contingent arrangements: who really engages and pays workers; how the advertised rate turns into net pay; which deductions are being made; and how clearly all of this is documented and explained. In NMW investigations, the ability to evidence pay, working time and any offsets for cost of uniforms or accommodation will be as important as ever; in practice, many investigations and penalties arise from inadvertent rather than intentional breaches. 

At the same time, HMRC will continue to scrutinise tax and off‑payroll status, including  at the higher‑paid end of the market.  It is only a matter of time before we see a large tax assessment under the 2021 off payroll rules against as private sector organisation.  When this happens, it will further test the resilience of staffing supply chains and the quality of the evidence they have for the period being assessed.

The businesses that will be in the strongest position – with regulators, counterparties and investors – are those that move early: mapping their contingent supply chains, tightening documentation and transparency, and making sure that self‑employed models are genuinely defensible rather than a label of convenience. Those who wait for FWA interventions or HMRC enforcement action to force change are more likely to find that problems surface on someone else’s timetable such as in a transaction process rather than on their own terms.

We are still awaiting the government's consultation on how rights to guaranteed hours for agency workers and zero hours will be implemented. When those regulations come into force, the FWA will have the power to investigate and enforce those rights too.