Employment Rights Act 2025
New record-keeping requirement relating to holiday
What you need to know
Understanding the new duty to keep holiday records
From 6th April 2026, UK Employers will be required to to maintain adequate records of annual leave and holiday pay for a minimum of six years.
What is the current position?
Under the Working Time Regulations 1998, it has always been good practice for employers to keep records of annual leave and holiday pay.
However, there has been no explicit legal requirement to maintain records proving compliance (except for employment businesses supplying agency workers).
What changed from 6th April 2026?
Employers will now be legally required to keep “adequate records” demonstrating compliance with workers’ rights to paid annual leave. The law itself has not fundamentally changed, but scrutiny of holiday pay calculations and record‑keeping has increased, especially when you bear in mind the creation of the new Fair Work Agency.
Records should include:
• Ordinary and additional annual leave
• Annual leave carried forward from previous years
• Details of holiday pay and which pay elements are included or excluded
• Any payments made in lieu of annual leave, including carried-over leave
This requirement applies to all eligible workers, including those working irregular hours and part-year arrangements.
Employers can decide how records are kept, but they must be retained for a minimum of six years.
Why it matters?
Poor or incomplete records make disputes harder to defend, particularly for staff with irregular hours or non‑standard working patterns.
What happens if employers do not comply?
Failure to keep adequate records will be a criminal offence punishable by a fine.
Enforcement is expected to eventually sit with the new Fair Work Agency, launching in April 2026, which will act as a single labour market enforcement body covering areas such as minimum wage, statutory sick pay, modern slavery, and holiday pay.
However, enforcement regulations transferring powers from HM Revenue and Customs have not yet been published, so these powers are not immediately operational.
How to prepare for the changes
What should employers do now?
Employers should review their holiday tracking and payroll systems to ensure they can demonstrate compliance before April.
Consider having some HR software in place to track and record annual leave. Such systems can do a lot of other things as well. If you want a demo of the system that Hill HR provide to clients, please give us a shout.
- Review your current practice for recording holiday – how and where do you currently record holiday and holiday pay?
- Process changes– have a system in place for recording holiday and holiday pay. This can be an HR system or spreadsheet.
- Compliance – in the event you are asked to provide evidence of holiday and holiday pay, for example by the Fair Work Agency record-keeping review for holiday pay compliance.
How Hill HR can support you
As your outsourced HR partner, we can help you manage your holiday recording process. We can provide advice on short term absence, help you manage employees who have been off work for a long time to either return them to work or manage them out of the business.
We can provide advice, guidance, policies and draft letters for you to send – ensuring everything is being done lawfully, correctly and sensitively.
A Practical Checklist for Business Owners
Use this checklist to get ready:
- Carry out an Audit: on how you record workers’ annual leave entitlement and pay, and identify where there may be gaps
- Understand holiday entitlement: total holiday entitlement including/not including bank holidays, carry over rules and how to treat part-year and irregular hours workers.
- Track leave taken: have a system in place to record dates of holidays taken, holidays used and remaining balance.
- Keep accurate pay calculations: record the method of calculating holiday pay, the reference period used and the breakdown of holiday pay, overtime, bonuses etc.
- Retention: keep records for 6 years and ensure the records are accessible.
- Review regularly: periodically review to ensure it meets compliance.
