Holiday pay enforcement: Fair Work Agency

Authors: Stephen Miller, Heidi Watson, Corinna Harris, Sophie Jackson and Charlotte Stern

The government is consulting on plans to give the Fair Work Agency (FWA) powers to enforce compliance with statutory holiday pay requirements.

The FWA, which was established in April 2026, is intended to act as a central employment rights enforcement body, bringing together a number of existing functions and enforcement powers. Under the Employment Rights Act 2025 (ERA 2025), the government has the ability to extend the FWA’s remit to include holiday pay, moving enforcement beyond the current system under which workers generally have to bring their own tribunal or civil court claims to recover any underpayments.

The consultation seeks views on how the new holiday pay enforcement regime should operate in practice. Key proposals include:

• Limiting the FWA’s role to enforcing compliance with statutory holiday entitlement. Any enhanced contractual holiday entitlement over and above the statutory minimum would be outside its scope.
• Allowing the FWA to pursue holiday pay underpayments going back up to six years. This would align with employers’ obligation to retain holiday records for six years. However, enforcement action could only relate to underpayments arising from 18 December 2025 onwards, when the ERA 2025 received Royal Assent.
• Introducing a naming scheme under which employers found to have underpaid holiday pay could be publicly identified, similar to the existing naming arrangements for NMW breaches.

If implemented, the proposals would represent a significant shift in the enforcement landscape, giving a state enforcement body proactive powers to enforce holiday pay compliance rather than relying solely on individual workers to bring claims. The consultation closes on 22 September 2026.

Key Action Points for Human Resources and In-house Counsel

Although the FWA’s holiday pay enforcement powers are not yet in force, employers should consider reviewing their holiday pay calculations, record-keeping practices and payroll processes now. Given the proposed six-year look-back period and the possibility of public naming for non-compliance, identifying and addressing any issues before the new regime is implemented could help reduce both financial and reputational risks.