From 2027, the Fair Work Agency (FWA) is expected to have powers to investigate breaches of employment law, require employers to rectify non-compliance and take enforcement action, rather than leaving workers solely reliant on bringing Employment Tribunal claims.

The Government has indicated that the FWA will take a more proactive approach to enforcing holiday pay rights, moving away from a system that primarily depends on employees pursuing claims themselves.

What will the Fair Work Agency’s new powers cover?

The FWA’s powers are expected to include:

  • Inspecting workplaces and requesting evidence
    The FWA will be able to require employers to produce records and documents demonstrating compliance with employment law. Since 6 April 2026, employers have also been required to maintain holiday and holiday pay records for six years, including records relating to former employees. These records should demonstrate the amount of statutory annual leave taken by each employee and how holiday entitlement and holiday pay have been calculated. They should also show any holiday pay paid on termination of employment.
  • Issuing Notices of Underpayment
    Where underpayments are identified, enforcement officers may require employers to repay affected workers and pay a financial penalty to the Government.
  • Bringing Employment Tribunal proceedings on behalf of workers
    The FWA will be able to bring civil proceedings in the Employment Tribunal on a worker’s behalf and, in certain employment and trade union law cases, provide legal advice or assistance.
  • Using stronger enforcement measures for serious or persistent breaches
    These measures may include Labour Market Enforcement Undertakings and Labour Market Enforcement Orders. Failure to comply with an order may constitute a criminal offence and could result in fines or imprisonment.
  • Recovering enforcement costs
    Regulations may allow the Government to recover enforcement costs from non-compliant employers.
  • Taking a proactive approach to enforcement
    The FWA has indicated that it will focus on high-risk sectors and areas of concern, using guidance, corrective action or formal enforcement measures depending on the severity and persistence of any breaches.

For holiday pay specifically, the Government’s consultation states that state enforcement is intended to complement, rather than replace, the Employment Tribunal process.

The aim is to provide workers with a more accessible and timelier route to recovering statutory holiday pay that has not been paid correctly.

Need support with these upcoming changes to payroll?

If you have any questions about holiday pay calculations or your record-keeping obligations, please speak to your usual Milsted Langdon contact or a member of the payroll team.