As everyone is aware the rules for holiday records changed in April this year requiring you to keep 6 years of records, but what has, perhaps, not been noticed by many employers is that the Government has launched a new agency (Fair Work Agency) tasked to hunt out employers who are not paying holiday pay correctly (paying being the critical point here) – and this will actively start at the beginning of 2027.
How the Fair Work Agency Will Operate
The language used around this agency is, for now, employer friendly – consultation, education but, underneath that lies a harder edged narrative around “bad actors” taking advantage – as a result, this should not be ignored.
On the 30th of June, a consultancy process began as to quite how the agency will operate – for the most part, there seems to be an initial intent to support, but within the velvet glove of support and education we find the inevitable enforcement measures – and they don’t make comfortable reading for those who are not compliant.
Proposals include not only recouping underpaid holiday pay to employees, but also a 200% employer penalty (capped to £20k per employee) – with a 6 YEAR proposed claim period – in that case if a 50-employee firm had underpaid by £20 per day on holiday pay there could be a potential exposure to an almost £400,000 liability.
Why the Fair Work Agency Is Needed After All
Under those circumstances you might think the above is a very unusual scenario, but here at Capture it™, it’s surprising the number of employers we see who are ignorant of things like Euro Holiday Pay (if you pay overtime/bonuses this probably affect you) – which is been validated by judgements as long ago as 2016 – and who rely on things like ‘rolled up’ holiday pay – (in most cases this went by the wayside in April 2006, unless the employee is variable hour or part year).
How Capture it™ Helps Employers Achieve Holiday Pay Compliance
We, at Capture it™, naturally review all new client’s rules with them in our comprehensive scoping process, and when we find those whose holiday payment records and rules are – in our view – non-compliant we advise them of such, and how Capture it™/Payroll can be used to resolve the potential issues so we are ideally placed to see how common misunderstandings are in this area.
The Fair Work Agency IS going to take action around this so businesses should ensure compliance (and sort out potential historical non-compliance) well before the beginning of next year or face substantial financial risk.
FAQs
What is a fair work agency in the UK?
The Fair Work Agency (FWA) launched on 7th April 2026, to protect workers’ rights with the combination of multiple workplace rules such as Statutory Sick Pay, Agency worker protections and more into one place.
What will the new Fair Work agency be responsible for?
The FWA will protect workers from exploitation, non-compliance and unsafe conditions.
What are the penalties for fair work agency?
FWA enforcement workers have the right to carry out investigations and inspections at random making compliance essential. Penalties for non-compliance include repayment of owed wages and statutory payments and standard fine.
Need help with your holiday pay compliance?
Ensure your holiday pay calculations are compliant, identify potential historical underpayments, and maintain the records you’ll need if your business is ever investigated. Speak to our team to see how Capture it™ can help your business stay compliant.
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