Holiday Pay Record Keeping: The New Rules from 6 April 2026

Keeping accurate holiday records is now a legal duty for small business owners. From 6 April 2026, employers in Great Britain must keep records that prove they have given workers the right amount of paid holiday and paid it correctly. Getting this wrong is no longer just an HR headache, failing to keep adequate records is a criminal offence. This post breaks down what the new duty actually requires, why it matters and the practical steps to stay compliant.

Why Holiday Pay Records Matter for Your Business

Holiday records are more than just paperwork. They protect your business and your people by providing clear evidence of what someone was entitled to and what you paid them. If a dispute arises, these records show you followed the rules. They also help you track leave accurately, which supports fair treatment and good morale.

From 6 April 2026 the stakes are higher. Until now, employers in Great Britain were not legally required to keep records of the holiday their workers took.

The Employment Rights Act 2025 changes that: it creates a new legal duty to keep "adequate" records showing you have complied with holiday entitlement and holiday pay rules. Missing or incomplete records are no longer just a practical problem, they can be a criminal offence in their own right.

What Holiday Pay Records You Must Keep

From 6 April 2026, you must keep records that show you have met three obligations: giving workers the correct amount of statutory leave (currently a minimum of 5.6 weeks a year), paying them correctly for that leave, and paying for any unused statutory leave when someone leaves.

In practice, that means recording:

• Holiday taken — the leave each worker has actually taken.

• Holiday carried over — any leave carried forward from a previous leave year, and the reason for it.

• Holiday pay — what you paid, including details of what was included in the calculation, such as bonuses, commission or regular overtime.

• Payments in lieu — pay for any unused statutory holiday when someone's contract ends.

The law does not prescribe a fixed list of fields or a particular system. The Act says records may be "created, maintained and kept in such a manner and format as the employer reasonably thinks fit." There is no detailed government guidance yet on exactly what counts as "adequate," so for now you'll need to make a sensible judgement about what to record and keep. In most cases your existing payroll or HR system will already capture much of this, the job is to check it captures all of it.

How Long You Must Keep Holiday Records

You must keep holiday records for at least six years from the date each record was made.

Note that this runs from when the record was created, not from the end of the tax year it relates to. So a record made in July 2026 must be kept until at least July 2032. Build this six-year retention period into your data protection and retention policies, because the new rule sits alongside your UK GDPR obligations, you must keep the records, but only in line with data protection law.

One point worth flagging: many retention guides still list "absence and working time records" at two years. The new holiday-record duty overrides that for holiday and holiday-pay records specifically, six years is now the figure to work to.

Examples of Common Record-Keeping Scenarios

Imagine you have a small team of five. One employee takes two weeks of holiday in July 2026. You pay their holiday based on their average weekly pay over the previous 52 weeks (the statutory reference period for working out a week's pay for variable earners). You would record their entitlement, the dates taken, what you included in the holiday pay calculation, and the amount and date paid. You keep those records until at least July 2032. If they later query their holiday pay, you can show clear evidence.

Another example: an employee works irregular hours. You calculate their holiday pay using their average pay over the previous 52 weeks, not 12 weeks, which was the old reference period before April 2020. You'd keep records showing the hours worked, the calculation method and the payments made. That keeps things transparent and gives you the evidence to back it up.

What Happens If You Don't Keep Proper Records

The consequences of poor record-keeping changed on 6 April 2026:

• It can be a criminal offence. Failing to keep adequate holiday records dating from 6 April 2026 is a criminal offence in its own right, punishable by a potentially unlimited fine.

• A new enforcer. The Fair Work Agency, a new government body, will have powers to inspect records and take action on holiday and holiday pay. (The agency launched on 7 April 2026 but is phasing in its powers, starting with areas such as the minimum wage; its holiday-pay enforcement powers are expected to follow.)

• Repaying underpaid holiday, plus a penalty. If your records show holiday pay was underpaid, the Fair Work Agency can require you to make up the shortfall and impose a financial penalty on top.

• Disputes and reputation. Without records, resolving a pay dispute is harder and more costly, and poor record-keeping can damage employee trust.

  
  

Good records protect your business and help maintain positive working relationships.

Stay compliant with this new duty:

To get ready, take these steps now:

• Check what holiday and holiday pay records you already keep and for how long.

• Identify any gaps, particularly carry-over and the breakdown of what's included in holiday pay.

• Make sure your payroll or HR system captures everything the duty requires and retains it for six years.

• Update your data protection and retention policies to reflect the six-year rule.

• Train anyone involved in payroll or HR on the new requirement.

Starting early reduces stress and means you meet your obligations without a last-minute scramble.

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This is general information, not legal advice. If you're facing a specific situation, speak to an employment solicitor.