UK Government Consults on New State Enforcement of Holiday Pay Rights
The UK government has launched a public consultation on how the new Fair Work Agency (FWA) will enforce workers’ statutory holiday pay rights from 2027. Published on 30 June 2026 by the Department for Business and Trade, the consultation forms part of the wider “Make Work Pay” agenda under the Employment Rights Act 2025. It closes at 11:59pm on 22 September 2026. Full details and the response form are available at: https://www.gov.uk/government/consultations/make-work-pay-holiday-pay-compliance-and-enforcement
Paid annual leave is a long-established employment right intended to support workers’ health, wellbeing and work-life balance. Most employers already comply, but non-compliance can leave individuals out of pocket and undercut responsible businesses. Until now, workers have largely had to pursue underpayments through the Employment Tribunal system. For the first time, the FWA will provide state-backed enforcement of statutory holiday pay, complementing the tribunal route with a more accessible and timely alternative.
The consultation focuses on the proposed compliance and enforcement framework rather than changing the underlying holiday entitlement rules themselves. It is not seeking views on how holiday pay is calculated, the amount of leave workers receive, or what elements of pay are included in the calculation. Nor does it cover enforcement through Employment Tribunals. The territorial scope is limited to England, Wales and Scotland; employment law remains devolved in Northern Ireland.
The government’s preferred approach is deliberately supportive. The FWA would prioritise helping employers understand and meet their obligations through guidance, tools and engagement. Punitive action, including investigations and civil penalties, would be reserved for cases where necessary. Officials stress that holiday pay rules can be complex, particularly for irregular-hours and part-year workers, and that even well-intentioned employers can fall into accidental non-compliance. Clear support and practical guidance are therefore seen as essential.
Key design questions open for comment include the length of the claim period. The government proposes that the FWA could investigate underpayments going back up to six years. This matches the default period set out in the Employment Rights Act and the new requirement for employers to keep holiday pay records for six years. Importantly, the FWA would not be able to enforce claims relating to periods before the Act received Royal Assent on 18 December 2025.
On penalties, the consultation proposes aligning the civil penalty regime with that already used for National Minimum Wage enforcement. This would mean a penalty of 200% of the arrears owed to each worker (reduced to 100% if the full arrears and half the penalty are paid within 14 days), subject to a maximum of £20,000 per worker and a minimum of £100. Views are also sought on whether a public “naming” regime, similar to that used for minimum-wage breaches, should be extended to holiday-pay underpayments.
A further theme is targeting support and enforcement towards lower-paid and more vulnerable or precarious workers. Options under discussion include placing a cap on the maximum arrears recoverable through FWA action (leaving higher-paid workers to use the tribunal for larger claims), prioritising complaints from lower-paid workers, or focusing proactive work on geographic areas with concentrations of vulnerable employment.
Finally, the consultation invites evidence on the practical use of “rolled-up” holiday pay, the method introduced in 2024 to simplify calculations for irregular-hours and part-year workers. Officials want a clearer picture of how widely and how effectively this approach is being applied.
Responses are welcomed from workers, employers of all sizes, business representative organisations, trade unions and other interested parties. The government intends to use the feedback to shape a fair, proportionate and effective regime that backs responsible employers while giving workers greater confidence that their rights will be upheld. A formal government response will be published on GOV.UK in due course.