The New Legal Duty on Employers to Keep Holiday Records:
What You Need to Know
From 6 April 2026, UK employers are subject to a significant new legal obligation: a statutory duty to keep detailed and accurate records of employees’ annual leave and holiday pay.
While many organisations already track holiday informally, this change transforms record keeping from good practice into a legal compliance requirement, with serious consequences and heavy fines for getting it wrong.
What’s Changed?
The new requirement is introduced under the Employment Rights Act 2025, Which amends the Working Time Regulations 1998.
From April 2026, employers must keep adequate records to demonstrate compliance with holiday entitlement and pay, retain those records for at least 6 years, and failure to comply may amount to a criminal offence with potentially unlimited fines.
What Does “Adequate Records” Mean?
The legislation does not prescribe a rigid format. Employers must keep records suffcient to demonstrate compliance with statutory holiday rights.
In practice, this means your records must clearly show:
- The amount of annual leave entitlement, including statutory holiday, any contractual holiday entitlement, and any additional days accrued through long service or other incremental schemes, with a clear record of how and when these were earned.
- The amount of leave taken and the dates on which that leave was taken.
- Any leave carried over between leave years, including the amount carried forward and the reason for carry over, for example long term sickness, maternity leave, or contractual carry over arrangements.
- The amount of any additional leave purchased or sold back by the employee under any holiday purchase/buy-back scheme, including number of days bought or sold, date of transaction or agreement, value per day or method of calculation, total monetary value applied, how it was applied (e.g. payroll deduction, one-off payment).
- Holiday pay calculations, including basic pay, overtime, commission, and bonuses where applicable.
- Any payments in lieu of unused holiday when employment ends.
- Records must enable employers to evidence that statutory and contractual entitlements have been met and calculated correctly.
Employers should also ensure that annual leave policies and terms and conditions are up to date and clearly communicated to employees.
How Should Records Be Kept?
Records can be kept digitally or on paper, including HR systems, payroll systems, or structured spreadsheets. However, systems must be consistent, auditable, and aligned across HR and payroll.
Old style holiday wall planners, informal emails, or ad hoc approval systems are unlikely to meet the required standard of record keeping.
Enforcement
A key development alongside this new obligation is the role of the Fair Work Agency, which is responsible for enforcing compliance. The Agency has wide-ranging powers to inspect employer records, carry out investigations without needing an employee complaint, and require employers to produce evidence of compliance.
This means holiday record-keeping is no longer simply an internal HR matter; it is something that may be actively reviewed by a regulator. Employers must now be able to prove compliance and should therefore ensure systems are robust, accurate and readily accessible.
What Employers Should Do Now
Take action now to ensure that records could stand up to external scrutiny at any time. Without clear records, even compliant employers may struggle to defend claims.
Audit your current processes, align HR and payroll systems, standardise record keeping, check holiday pay calculations, implement a 6-year retention policy, and train managers.
How We Can Help
We can support you by identifying risks and implementing compliant and practical solutions.
If you would like advice or a holiday system audit, please get in touch.