Employment Rights Act 2025

From 6 April 2026, employers must keep records of holiday pay and annual leave.

The Working Time Regulations 1998 are amended by s. 35 of the Employment Rights Act 2025 to require employers to keep records that are ‘adequate to show’ whether it has complied with its obligations in relation to annual leave.

The information that must be recorded includes:

• ordinary and additional annual 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

The form that these records take is up to the employer, but they must be kept for at least six years. Enforcement of this new duty will fall to the Fair Work Agency.

Failure to keep adequate records dating back to 6 April 2026 will be a criminal offence (punishable with potentially unlimited fines). In addition, if the records reveal that holiday pay has not been paid correctly, the FWA 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.