The Government has introduced a new legal requirement for employers under the Employment Rights Act 2025. While many provisions of the Act were expected, this last-minute update was not included in prior government roadmaps and has surprised many businesses.
From 6 April 2026, employers must maintain adequate holiday pay and entitlement records for all workers, including full-time, part-time, casual, and irregular hours employees. Records must be kept for six years.
What employers needs to know about the new holiday rules
Currently, there is no legal requirement to keep detailed records of holiday entitlement and pay. Most businesses track holiday for operational purposes, but from April 2026, record keeping becomes a statutory duty.
Employers must be able to clearly evidence:
Each worker’s annual leave entitlement
Holiday taken during the leave year
Any carry forward of unused leave
How holiday pay is calculated
Payments made in lieu of unused leave
Why this change matters
For many organisations, particularly small and medium sized businesses, this change introduces an additional administrative requirement.
Where holiday is currently tracked informally or across multiple systems, there may be gaps in the level of detail required to demonstrate compliance.
Failure to meet the new requirements will be unlawful, with the potential for financial penalties. The Fair Work Agency being introduced next month will have the power to request holiday records and fine businesses for any breaches.
What should you do now?
It's now time to review your processes for recording holiday and ensure that you have a central system. Options to look at your payroll software, HR software or system, a secure spreadsheet or cloud based employee files
Key steps to consider include:
reviewing how holiday and pay records are currently maintained and stored
identifying any gaps in record keeping. Check for missing details on carry over, pay calculations or leave entitlements
ensuring payroll processes clearly support holiday pay calculations
update payroll and HR systems to ensure all holiday pay is traceable
confirming that records can be retained securely for six years
How we can help
If you are looking for a HR Partner who can support you with the many changes being introduced from the Employment Rights Act 2025, get in touch and we'll be happy to discuss options with you. Print out our downloadable guide below.
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