New Powers Could Get You Back Six Years of Underpaid Holiday Pay — Here's How to Check

The government has launched a consultation on how the new Fair Work Agency will enforce statutory holiday pay compliance from 2027, running from 30 June to 22 September 2026. If your holiday pay has ever looked wrong — too low during a variable-hours month, or missing entirely — this is worth understanding now, not just when the powers arrive.

What the Fair Work Agency will be able to do

Under the proposals, the FWA will be able to investigate underpayments, recover holiday pay arrears on workers' behalf, and issue enforcement notices and financial penalties — without you needing to bring an employment tribunal claim yourself. Crucially, the agency is expected to be able to investigate holiday pay claims going back up to six years, far beyond the usual short time limits that put people off pursuing a claim. The FWA can also take a "whole employer" approach — reviewing an employer's entire workforce rather than just the individual who complained, which could surface systemic underpayment affecting colleagues too.

The stated intention is to focus first on supporting employers to comply, using punitive action only where necessary — a shift from the old model of relying almost entirely on individuals to enforce their own rights through tribunals.

Why holiday pay so often gets underpaid

Holiday pay for workers with variable hours or overtime should reflect average earnings, not just basic contracted hours — a rule many payroll systems still get wrong, particularly for zero-hours, casual and shift workers whose pay varies week to week. This is a widespread problem: the UK's approach broadly echoes Australia's Fair Work Ombudsman model, which has recovered hundreds of millions of dollars in underpaid wages and entitlements annually through similar proactive investigation powers, rather than relying solely on individual claims.

Checklist: work out if you might be owed holiday pay

• Compare your last few payslips covering a holiday period against your average weekly earnings over the previous 52 weeks — not just your basic contracted hours.
• If you're on a zero-hours, casual, or variable-shift contract, check whether overtime and regular bonuses were included in your holiday pay calculation.
• Ask your employer or HR team directly how holiday pay is calculated for your contract type — you're entitled to a clear explanation.
• If you suspect underpayment, keep copies of payslips and rotas as evidence before raising it, since these consultations point to potential six-year look-back periods.
• Once the Fair Work Agency's enforcement role is confirmed (expected from 2027), you may be able to raise concerns with the agency directly rather than only through an employment tribunal — check gov.uk for updates as the rules are finalised.

Key Numbers

• Consultation period: 30 June – 22 September 2026
• Potential look-back period for arrears: Up to 6 years
• Fair Work Agency established: April 2026

Sources

• gov.uk: Make Work Pay — holiday pay compliance and enforcement
• Littler: Holiday Pay Enforcement in the UK
• Mondaq: UK Government Consults on Enforcement of Statutory Holiday Pay
• Personnel Today: Consultation on holiday pay compliance launched

Educational content only — not financial advice.