Fair Work Agency recovers £59,000 unpaid wages for five agency workers

The UK's Fair Work Agency has recovered more than £59,000 in unpaid wages for five IT agency workers who weren't paid for 19 days of work completed through an agency in May. The case turns on paperwork, not principle: the agency's opt-out agreements failed a regulatory test, and the workers kept their legal protections as a result.

The five workers complained to the FWA's Employment Agency Compliance team. They had gone unpaid for 19 days of work delivered through the agency in May. The agency's defence was straightforward: it told the FWA that payment had been withheld because the workers had left to work through another employment business.

Why did the agency think it could withhold pay?

The agency also stated that each of the five workers had signed an agreement opting out of the Conduct of Employment Agencies and Employment Business Regulations 2003 — the "Conduct Regulations" that govern how employment agencies and employment businesses treat the people on their books.

Contractors who work through their own limited company can opt out of protection under this regulation. But the opt-out isn't self-executing. If workers choose that route, agencies must request a formal opt-out agreement and keep it for their own records.

The FWA's investigation found the paperwork didn't hold up. The agency claimed the opt-outs released it from the Conduct Regulations, but it couldn't show the hirer had been notified of the opt-out agreements — a requirement set out in Regulation 32.

"After stating payment had been withheld because the five workers had opted out of the Conduct Regulations, the agency could not provide sufficient evidence of the hirer being notified of the opt-out agreements, as required by Regulation 32," the FWA inbound inspector who led the investigation said. "As a result, the opt-outs were not valid and the Conduct Regulations continued to apply to the workers."

What does the ruling change for employers?

With the opt-outs invalid, the Conduct Regulations applied in full. That made the withheld payment a breach of Regulation 12.

"Consequently, the withholding of payment constituted a breach of Regulation 12 and as a result of the investigation, all monies owed to the five workers were paid in full," the inspector said.

The individual recoveries varied widely. The five workers received £11,970, £9,120, £10,260, £10,602 and £17,100 respectively, according to the FWA.

For agencies and hirers, the compliance lesson is narrow and concrete. An opt-out signed by a worker doesn't stand on its own; Regulation 32 requires the hirer to be notified, and the agency bears the burden of proving that happened. Without that evidence, agencies remain fully bound by the Conduct Regulations — including the payment obligations under Regulation 12.

The FWA's head of compliance, inspections and tribunals framed the case as part of a broader enforcement posture. "This is a prime example of how we support workers who know they have been underpaid and need support in receiving the money they are rightfully owed," they said. "The sums returned to these workers were significant, and the stress and hardship caused when payments are withheld is not acceptable."

What did unions take from the case?

The Workers Union greeted the recovery as confirmation that pay disputes can be resolved through regulator intervention rather than drawn-out individual claims.

"For The Workers Union, this successful recovery reinforces a fundamental principle: working people should receive money they have legitimately earned, and they should have access to clear information and appropriate support when disputes arise," a union spokesperson said.

The message for people-operations teams runs in two directions. Workers who suspect underpayment can bring complaints directly to the FWA's Employment Agency Compliance team and recover full sums — here, every penny owed across all five claimants. Agencies, meanwhile, face a simple audit question before withholding pay on opt-out grounds: can they produce documented evidence that the hirer was notified of each opt-out agreement, as Regulation 32 requires? If they can't, the opt-outs are void, the Conduct Regulations still apply, and withheld wages become a recoverable breach.

The FWA has signalled it will keep pursuing cases where agencies rely on opt-outs they can't substantiate, and agencies that haven't reviewed their opt-out notification records may find the next review comes from an inspector.