In a last-minute twist in the rollout of new measures in the Employment Rights Act, employers have a new duty from 6 April 2026 to keep records relating to annual leave and holiday pay.
From this date, effectively just one working week away, employers must maintain adequate records tracking their staff’s annual leave and any associated payments.
This can be done in any format the employer reasonably considers appropriate, but the information must be kept for six years. The information that must be recorded includes:
- Ordinary and additional annual leave
- Annual leave carried forward from previous years
- Details of holiday pay, including which pay elements have been included or excluded
- Any payments in lieu of annual leave, including for carried‑over leave.
There has been no explicit announcement from the government, and the new duty is omitted from the Department for Business and Trade’s timeline for changes being introduced in 2026.
Employment lawyers have spotted the measure in legislation published this week. Reg 3(8) of the commencement regulations brings into force Section 35 of the Employment Rights Act 2025, namely a requirement to keep records relating to annual leave. This introduces a duty to keep holiday records under the Working Time Regulations 1998 (WTR) from 6 April 2026.
Stephen Simpson, principal editor at Brightmine, said: “While many employers will already have systems in place to track and record annual leave, there hasn’t previously been a specific requirement to keep annual leave and holiday pay records.”
He added: “What’s surprising is that this new requirement has barely merited a mention in any of the Government’s press releases, consultations, roadmaps and timelines on the Employment Rights Act.
“The government has previously been silent on a potential implementation date for this, and there are no transitional provisions to give employers time to prepare. And yet it’s now been confirmed in a low-key commencement order published this week.”
Most HR practitioners have just one week to ensure compliance, as 6 April is Easter Monday and 3 April is Good Friday – both bank holidays.
‘Administrative burden’
Writing in a post, Katie Wooler, professional support lawyer for Burges Salmon, said: “There was one big surprise in the regulations. Neither the government’s implementation roadmap from last summer, nor its timeline update from earlier this year, gave any indication of when the new duty for employers to keep and retain annual leave records would come into force.”
She explained that, for some employers, this new duty could create a “significant administrative burden, particularly if they have complex annual leave or holiday pay arrangements for their staff or if their existing systems and records are piecemeal”.
Enforcement of holiday obligations will fall within the remit of the Fair Work Agency, which launches on 7 April. Legal experts have said employers should audit how they record workers’ annual leave entitlement and pay, and identify where there may be gaps.
Duty to keep holiday records
Employers will be required to keep records to demonstrate that all eligible workers – including people working irregular hours or part-time – have been given the paid holiday they are entitled to under the WTR. Holiday records must be “adequate” – enough to be able to demonstrate compliance.
Libby Hubbard, senior professional support lawyer at law firm Anthony Collins, stressed that failure to comply with the relevant requirements of the WTR is a criminal offence, which could lead to unlimited fines. She said: “It’s important to note that inadequate records will be of very little help should a worker bring a claim for holiday pay.
“Records which set out a worker’s holiday entitlement and details of payment (whether that be as they take it, or rolled-up holiday pay for atypical workers) will provide a robust defence to such a claim.”
‘Demonstrable compliance’
Caroline Prosser, a partner at Hill Dickinson, said: “The change reflects a broader shift towards demonstrable compliance, shaped by evolving case law and increased scrutiny of holiday pay practices.
“Employers that use this moment to strengthen their data, processes and governance will be better positioned as the regulatory landscape becomes more rigorous, particularly with the introduction of the Fair Work Agency, which will oversee this area and have enforcement powers.”
Simpson added: “The introduction of an employment law is one thing – its enforcement, which with this law will sit with the Fair Work Agency, is quite another. The Fair Work Agency is something of an unknown quantity for employers. It is being launched on 7 April, but how quickly will its enforcement activities be up and running?
“The Fair Work Agency’s powers are extensive, including the power to enter premises (albeit only with a warrant), inspect and seize documents, and serve notices of underpayment (with a set period for employers to pay). Penalties are set at 200% of the total underpayment.
“The most serious breaches – such as failure to comply with an FWA labour market enforcement order, knowingly or recklessly providing false information or documents, and the offence of obstruction – could even attract a criminal charge and/or an unlimited fine.”
Personnel Today has approached the Department for Business and Trade for comment.
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