Consultation: Holiday Pay Compliance and Enforcement

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From 2027, the statutory right to holiday leave and pay will be enforced by the new Fair Work Agency (FWA). However, the UK Government’s first action is to find out what guidance will support employers getting things right before compliance activity takes place. This is the subject of a new consultation together with a new penalty regime.

Courtesy of the Employment Rights Act 2025, the FWA was established to oversee enforcement in a number of areas, including the statutory right to holiday leave and pay.  A UK Government consultation seeks to shape this enforcement; however, it is important to note the areas this does not cover: 

  • Northern Ireland, as employment and working time is devolved;
  • Occupational entitlement which is in excess of the statutory minimum;
  • How the statutory right to holiday leave is calculated;
  • How the statutory right to holiday pay is calculated;
  • What is included in the holiday pay calculation 

Therefore, the consultation is all about the FWA’s proposed approach to holiday leave and pay compliance and enforcement.  Plus, the support and guidance they could provide to help support employers, all in the name of compliance.  This is a large consultation and applicable to both employers and workers.  These include questions about:

  • The current guidance that is available, for example on Gov.UK or Acas;
  • A 200% penalty for holiday pay underpayment, subject to a maximum penalty of £20,000 per worker;
  • A naming regime for employers who fail to meet their statutory responsibilities, akin to the regime in place for failing to pay at the National Minimum / Living Wage;
  • How the FWA should focus their compliance activities on lower-paid workers in various sectors; and
  • The use of and understanding of rolled-up holiday pay for irregular hours / part year workers;

For Bookkeepers 

It is clear the UK Government’s Fair Work Agency in Great Britain is going to be focused and targeted when it comes to compliance with holiday leave and pay.  The consultation is open until 22 September 2026 and ICB encourages members to respond in one of three ways: 

1.     Online;

2.     E-Mail to holidaypay.enforcement.consultation@businessandtrade.gov.uk; or

3.     In writing: Pay Rights Enforcement Team, Employment Rights Directorate, Department for Business and Trade, Old Admiralty Building, Admiralty Place, London, SW1A 2DY

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