From 6th April 2026, the Employment Rights Act 2025 introduced a last minute significant new legal duty on employers around holiday pay and annual leave record-keeping.
Currently there is no strict format or retention period for employers to keep holiday records for any specific period of time. However, from 6th April 2026, a new duty has been introduced for employers to keep holiday records for a mandatory 6-year retention period. This includes detailed and auditable records on employee's annual leave and holiday pay.
This new legislation will be very admin focussed so to help you make better sense of the changes; we have given you a breakdown of what you must do:
Key legal requirements:
Employers must keep records of annual leave and holiday payments for a minimum of 6 years (even after an employee leaves the company).
Employers must keep sufficient records to demonstrate compliance and must be able to show how every worker's holiday pay was calculated which will include:
- Holiday entitlement (how much leave an employee is entitled to)
- Leave taken (dates and amounts)
- Holiday pay calculations, including:
- Basic pay
- Overtime
- Commission
- Bonuses or allowances
- Payments on termination (unused holiday pay)
- Carry-over of leave from previous years
Enforcement and risks:
This will be enforced by the new Fair Work Agency from April 2026 and will include:
- Inspecting premises
- Requesting records
- Interviewing workers
- Issuing penalties and enforcing arrears
Non-compliance risks:
- Will be a criminal offence not to keep adequate records
- Unlimited fines
- Potential tribunal claims (including historic claims up to 6 years)
Essential steps for employers to ensure compliance:
- Review your HR/payroll systems (ensuring they contain full holiday data)
- Keep clear audit trails of holiday pay calculations
- Ensure records are accessible and retrievable
- Train managers/payroll staff on what must be recorded
- Pay particular attention to staff with variable hours/part time workers
BreatheHR
To help with record-keeping and ensure compliance, why not try BreatheHR.
Breathe offer a full digitalised holiday management system which is easy to use by both the employer and employee. This straightforward HR system will help centralise all HR processes in one easy to use platform ensuring a compliant audit trail.
Some key features of the holiday management system include:
- A birds-eye view of who is on holiday and when
- Employees can book holidays from their mobile app
- Line managers can respond to holiday requests in seconds
- Calculate holiday allowances easily
- Run reports on holiday usage and leftover leave
- ….. and much more
If you'd like more information on BreatheHR, please do get in touch for a free trial with no obligation.
