Fair Work Agency publishes first Delivery Plan

In a previous article, we explained the creation of the Fair Work Agency (FWA) and the new requirement for employers to keep records demonstrating compliance with statutory annual leave obligations.

The FWA has now published its first Delivery Plan, setting out its priorities for 2026-2027.

While the Delivery Plan focuses on the FWA’s first year of operation, it provides a useful indication of the Government’s direction of travel on employment rights enforcement and highlights areas you should begin preparing for now.

Holiday pay remains firmly in the spotlight

The publication of the Delivery Plan follows the Government’s consultation on holiday pay compliance and enforcement, which remains open until 22 September 2026.

The consultation proposes giving the FWA responsibility for enforcing statutory holiday pay rights from 2027. If implemented, the FWA would have the power to investigate alleged underpayments of statutory holiday pay, recover holiday pay arrears on behalf of workers, undertake wider workforce-level investigations where concerns are identified and impose civil penalties for non-compliance. This would shift how holiday pay disputes are addressed.

Historically, individual workers have generally pursued holiday pay disputes through the Employment Tribunal. The proposed regime would move towards a state-led enforcement mechanism, enabling the FWA to investigate compliance across an entire workforce rather than being limited to the circumstances of a single claimant.

The FWA’s approach to holiday pay enforcement is intended to be “highly supportive”, with an emphasis on helping employers understand and comply with their obligations and encouraging voluntary correction of errors. Proposed measures include additional guidance, calculators, worked examples, webinars and other digital tools. However, the Government is also considering introducing a “naming and shaming” regime for employers found to have breached holiday pay obligations. This could have significant reputational and financial consequences if non-compliance is identified.

Importantly, the proposed enforcement regime would only apply to statutory holiday pay under the Working Time Regulations 1998. Any entitlement to enhanced contractual holiday pay would remain a matter for the Employment Tribunal or civil courts.

It also proposed that the FWA should be able to recover holiday pay arrears going back six years from the date of the underpayment. This would align with the enforcement of national minimum wage and the new holiday record-keeping requirements.

The consultation recognises that lower-paid workers may be more vulnerable to receiving incorrect holiday pay. The Government is therefore seeking views on whether the FWA should prioritise complaints from lower-paid workers, as well as sectors and geographical areas with higher concentrations of lower-paid workers. The Government is also consulting on whether to limit the amount of holiday pay arrears that can be recovered through the FWA enforcement process, to discourage higher-paid workers from relying on the state enforcement route rather than pursuing claims through other mechanisms.

This proposal is likely to be particularly relevant to the manufacturing sector due to complex shift, overtime and variable-hours arrangements, which can increase the risk of holiday pay calculations being challenged and may attract greater scrutiny from the FWA.

What should you do now?

Although the FWA’s holiday pay enforcement powers are not expected to come into force until 2027, the ability to issue notices of underpayment and civil penalties for the workforce as a whole could significantly increase financial exposure. In addition, the proposed ability to enforce claims for up to six years of arrears could substantially increase potential liabilities where historic underpayments are identified.

You may therefore wish to proactively review your holiday pay practices, particularly where workers receive regular overtime, shift premiums, allowances, or other variable payments. Identifying and rectifying any issues now may help reduce the risk of future enforcement action and the accumulation of significant arrears before the FWA’s enforcement powers become operational.

Contact our employment law solicitors today

If you have any questions or concerns about the updates provided above, please contact a member of our Employment Law team. You can use our online enquiry form or call 0330 191 5713.