UK: new consultations on enforcement of statutory holiday rights and workplace monitoring

The government has published a consultation, open until 22 September, seeking views on the proposed approach of the new Fair Work Agency to statutory holiday pay compliance and enforcement from 2027.  Currently only individuals can bring holiday pay claims in the employment tribunal.  The proposals envisage an alternative enforcement route whereby the FWA could investigate claims of underpayment (potentially covering the whole workforce of an employer) and issue notices of underpayment and civil penalties.  The consultation stresses that the main FWA focus is to be on supporting compliance wherever possible, with enforcement action only where necessary.  A penalty would not ordinarily be issued where an employer has correctly repaid all holiday pay arrears before the start of an FWA investigation. 

The FWA would be able to investigate claims going back up to six years (but only in respect of non-compliance on or after 18 December 2025 when the ERA 2025 received Royal Assent), reflecting the new requirement on employers to retain holiday records for six years.  Civil penalties would be aligned to those for national minimum wage breaches (ie, arrears to be paid to the workers, plus a civil penalty paid to the government of 200% of arrears owed per worker capped at £20,000 per worker and subject to a minimum penalty of £100 and a 50% discount for early payment).  Naming and shaming is also being considered for the future. 

Notably, the consultation seeks views on how to target enforcement towards lower-paid and more vulnerable workers (for example, by capping the maximum arrears a worker can receive from FWA enforcement to disincentivise higher paid workers from using it, triaging complaints received to focus on these groups, or targeting proactive compliance and enforcement by geographical area).  It also seeks evidence on how the rolled-up holiday pay provisions (introduced in 2024) are working in practice. 

Employers should ensure adequate record-keeping processes have been implemented (given the record-keeping obligation applied from 6 April 2026).  Although commencement of FWA enforcement powers is not anticipated before 2027, employers should consider auditing holiday pay arrangements for compliance now, particularly where they have workers with irregular working patterns or complex pay packages where there is a greater risk of inadvertent miscalculation.  This issue may also be a key area for review on business acquisition.

A second consultation running until 30 September 2026 seeks views on the government's proposals to support the fair, transparent and responsible use of workplace monitoring technologies ('WMT', including but not limited to AI).  The consultation document seeks views on eight principles that reflect the government's pre-consultation view of what good practice looks like when introducing and using WMT: 

• clarity of purpose and rationale; 
• ensuring transparency and understanding; 
• meaningful worker engagement and voice; 
• fair use and non-discriminatory outcomes; 
• limiting use to what is necessary and proportionate and respecting privacy; 
• effective human oversight and accountability; 
• mitigating risks to dignity and wellbeing; and 
• regular review of accuracy, reliability and necessity.

The government's view is that effective engagement with workers or their representatives can support the responsible and effective adoption of WMT. Suggested interventions include (i) a statutory code of practice supported by guidance, (ii) a mandatory legislative duty to consult with trade unions or elected representatives, potentially including negotiation with a view to reaching agreement, or (iii) non-statutory guidance.  The government is seeking views on whether these or other interventions are necessary to ensure that "the UK leads the way in adopting workplace technologies … in a manner that supports innovation and growth while still putting worker voice at the heart of Britain’s digital transition".