Currently, employers in Great Britain are not legally required to keep records of the holidays taken by their workers. From 6 April 2026 this will change however, when the Employment Rights Act 2025 introduces a new requirement to keep adequate records to show holiday and holiday pay compliance. Our article explains more about this new duty, and the risks of failing to comply with it.

The Working Time Regulations already require employers to keep records in relation to the rules on maximum weekly working time, but most employers are not currently under a duty to keep records to show they are complying with the rules on holidays.

The Employment Rights Act 2025, however, creates a new legal duty on all employers to keep records demonstrating compliance with holiday entitlement under the Working Time Regulations (including the amount of leave and pay). Regulations have just been published which confirm that this obligation will come into force very quickly - on 6 April 2026.

What’s the new duty?

The new rules require employers to keep “adequate” records to show they have complied with-

  • the requirement to give workers the correct amount of annual leave (currently a minimum of 5.6 weeks’ statutory leave each leave year);
  • the obligation to make the correct payments for leave; and
  • the requirement to make a payment for unused statutory leave when the contract terminates (including for any leave which the employee or worker was legally entitled to carry forward from the previous holiday year).

The new rules will require records to be retained for six years.

The Employment Rights Act says that records may be “created, maintained and kept in such a manner and format as the employer reasonably thinks fit” but there is currently no clear guidance on what sort of records might suffice. Whilst it is possible that the Fair Work Agency will issue guidance on expectations later down the line, for now, employers will need to make their own judgement calls about what information they keep and how they keep it.

What’s the penalty for failing to keep adequate records?

A new government agency (the Fair Work Agency) will have powers to take enforcement action against employers who do not comply with their holiday and holiday pay duties. The Fair Work Agency launches on 7 April 2026, but it will not immediately have the authority to take enforcement action against employers for breach of these new duties, and we do not yet know exactly when its enforcement powers will kick in. What we do know is that the agency will initially focus its efforts on enforcing domestic agency rules; the minimum wage; licensing standards for gangmasters; and certain aspects of the Modern Slavery Act 2015. In time however, it will move on to enforcing holiday entitlement and it will have retrospective powers to take action about underpayments of holiday pay going back to December 2025 (when the Employment Right Acts 2025 was passed by Westminster).

Records will be critical in the event that the Fair Work Agency decides to investigate potential non-compliance. Failure to keep adequate records dating back to 6 April 2026 will be a criminal offence in itself (punishable with potentially unlimited fines).  In addition, if the records reveal that holiday pay has not been paid correctly, the Fair Work Agency will be able to demand the underpayment, and will be able to impose a penalty on top. The penalty will be 200% of the underpayment (capped at £20,000 per underpaid individual), halved to 100% if the penalty is paid within 14 days.

What should employers do now?

To get ready, employers should check what holiday and holiday pay records they already keep, and how long they keep them for.

Many employers will already be keeping adequate records, but should nonetheless check how their systems currently operate and whether additional processes are needed to ensure payroll and HR systems records are kept for six years.

You may also need to retain other records which you do not systematically gather and keep at all the moment – for example copies of any emails encouraging employees to use their leave up before the end of the holiday year and/or to show rollover of holidays where (for example) a worker has been prevented from taking them.

You should also check your data privacy and retention policies to ensure they reflect the new six-year requirement. 

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