A new duty for employers to maintain records demonstrating compliance with the right to paid annual leave came into force on 6 April 2026. The government has not made a formal announcement about this and so many HR professionals may miss this requirement, especially as 6 April 2026 was a Bank Holiday.
The Working Time Regulations 1998 are amended by section 35 of The Employment Rights Act 2025 (ERA 2025). It mandates that employers keep adequate records for a period of six years.
The way in which each employer maintains and records such information can be in manner that the employer may reasonably think fit. This gives employers flexibility, but the records should be comprehensive and accurate to demonstrate compliance.
Employers need to record the following for all eligible workers. This includes those working irregular hours or part-time:
- Ordinary and additional 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
Failure to comply with this obligation will constitute a criminal offence, punishable by a fine. This measure aims to ensure transparency and accountability in the enforcement of statutory holiday entitlements. The enforcement of this will likely be overseen and implemented by the new Fair Work Agency which was established on 7 April 2026.
The implementation of this duty is part of a broader set of reforms under ERA 2025, which seeks to enhance employment rights and improve workplace standards.
However, one potential unintended consequence of this change is the administrative burden it places on employers, particularly smaller businesses, which may lack the resources to implement robust record-keeping systems. Additionally, the criminalisation of non-compliance could lead to significant penalties for employers who inadvertently fail to meet the requirements. This could create a risk-averse culture where employers may overcompensate by implementing overly stringent or costly measures to avoid liability. Furthermore, the six-year retention period may raise concerns about data protection and the secure handling of employee information, particularly in light of GDPR obligations.
Employers should review their current record-keeping practices related to annual leave and ensuring they can retain accurate records for the required six-year period. This will help mitigate the risk of non-compliance and associated penalties. This may involve investing in appropriate systems and training to ensure accurate and secure maintenance of holiday entitlement records.
For further help and advice on this, and any other employment matter, please get in touch with B P Collins’ employment team at enquiries@bpcollins.co.uk or call 01753 889995.
