Holiday compliance and enforcement are on the Government's mind this week - maybe Mr Starmer feels he has holiday owed to him before he vacates No.10 Downing St in a couple of weeks.  

If he can hang on for 12 months (that's to his holiday entitlement claim and not his premiership - that ship has definitely sailed!), then he may be able to go to the Fair Work Agency for help.  

In a consultation published on 30 June, the Government outlined its plans for the holiday pay compliance and enforcement role of the FWA from 2027.  There are no huge surprises; however, it's worth noting the key points as employers should be mindful of the FWA and its potentially draconian enforcement powers. 

Key points in the consultation

• The consultation is NOT consulting on changes to holiday entitlement or pay or calculations - those will stay the same.  Its subject is the compliance and enforcement role of the FWA based on the current Working Time Regulations' entitlements.  
• The FWA will pursue complaints for unpaid holiday pay from an individual worker as well as from a group of workers.  That individual, however, will still have the right to bring a tribunal claim, although it's unlikely a worker will be able to “double recover” under both schemes.  The benefit for an employee of taking a complaint to the FWA is that 1) the limitation period is six years (see below) and 2) the FWA is bestowed with a range of investigation powers they can utilise that a tribunal does not have.  
• The consultation proposes that the FWA should investigate holiday pay claims from the previous six years. This aligns with the April 2026 requirement for employers to keep holiday records for up to six years and contrasts with the three-month (soon to be six-month) limitation period for tribunal claims.  Alarmingly, though, in contrast to most legislation, it appears the FWA's powers will be retrospective.  However, there is a limitation on that six-year period; holiday pay claims will not be enforceable by the FWA if they occurred before the ERA 2025 received Royal Assent in December 2025. It provides an example of this.
  • In December 2027, a worker comes to the FWA with a claim of holiday pay underpayment from December 2022 (five years in the past). While five years is within the proposed six-year claim period for holiday pay enforcement, the underpayment occurred before Royal Assent of the Act (which was 18 December 2025). In this scenario, the FWA could not enforce this worker’s claim.
• The FWA can issue notices of underpayment for holiday pay arrears and penalty payments.  These payments mirror the ones for NMW non-compliance; up to 200% of unpaid holiday pay with a maximum of £20,000 per worker.  The Government is at pains to point out that the FWA will assist organisations to comply with holiday pay compliance and will give employers an opportunity to pay any arrears prior to serving a notice of underpayment.  
• The names of employers who underpay holiday pay will be published.  The Government asks for views on this - this would mirror the publication of names for non-compliance with NMW regulations.
• Are there tools which would assist with compliance?  The consultation asks for ideas from responders on whether there is more to be done to help employers calculate holiday pay, especially with complex atypical working patterns e.g. digital assistants, details calculator of self assessments, more worked examples etc.   
• How can the intervention be more targeted for lower paid workers?  The Government suggests various ways to ensure the FWA's powers are wielded on behalf of the most vulnerable workers. Three ideas are to cap the maximum arrears a worker can win and so deter higher-earning employees; triage holiday pay complaints to focus on compliance where there is a higher proportion of lower-paid workers; and target compliance and enforcement by geographical areas. 

What should I do?

• You may want to respond to the consultation - closing date is 22nd September 2026.  
• It is also important to address your current compliance and any outstanding claims for unpaid holiday pay. Are your holiday records comprehensive? Do they comply with the changes made in April 2025 (see blog here)? Are there any gaps and can you plug them?
• Contact a member of the team if you would like advice regarding compliance and how to address historic (within the last six years) underpayments.