Holiday pay records: the 6-year rule UK employers need to know
On 6 April 2026, the UK quietly introduced a new legal duty for employers: keep records of annual leave and holiday pay for at least six years. Failure to keep adequate records is a criminal offence with potentially unlimited fines. The duty applies to every UK employer regardless of size, and it covers every type of worker including zero-hours and part-year staff.
This change was introduced through Section 35 of the Employment Rights Act 2025, which inserted Regulation 16B into the Working Time Regulations 1998. It barely featured in government communications and was not on most rollout timelines, so many employers are still unaware. It came in alongside changes to Statutory Sick Pay and day-one family leave rights, which we cover in separate articles. This article covers what changed, what counts as "adequate" records, and what to do now. We are not lawyers; this is not legal advice.
What changed
Before 6 April 2026, UK employers were legally required to provide statutory annual leave and to calculate holiday pay correctly. They were not legally required to keep records demonstrating that they had done so. Disputes over holiday pay generally relied on the worker producing evidence; the burden was indirect.
From 6 April 2026, that has reversed. Employers must now keep records that demonstrate compliance with annual leave entitlement and holiday pay obligations. The records must be retained for six years from the date each record is created. The format is up to the employer; the records must just be "adequate" to demonstrate compliance.
The duty is enforced by the Fair Work Agency, which launched on 7 April 2026 and has the power to inspect records and take enforcement action. Failure to keep adequate records is a criminal offence under the Working Time Regulations, punishable by a potentially unlimited fine.
Who is in scope
Every UK employer.
Every worker, including permanent employees, part-time employees, zero-hours workers, part-year workers, agency workers, workers with irregular hours, and workers whose pay varies (commission, overtime, bonuses).
There is no employer-size exemption. A business with one employee is in scope just as much as a business with ten thousand.
What counts as "adequate" records
The legislation does not prescribe a specific format. The records must just be sufficient to demonstrate compliance. Based on legal guidance published since the rules came in, three categories of information need to be covered.
The amount of leave each worker is entitled to. This includes both the ordinary 4 weeks of annual leave and the additional 1.6 weeks (5.6 weeks total for full-time UK workers). For workers with irregular hours or part-year contracts, the leave calculation needs to be evidenced. The two types of leave (Regulation 13 and Regulation 13A) carry forward differently, and where this distinction matters, records should preserve it.
The leave actually taken. Records should show when leave was booked, when it was approved, and when it was taken. For workers prevented from taking their leave, records should show why.
The holiday pay calculations. This is the trickiest area. Holiday pay must include "normal remuneration," which for variable-pay workers means commission, overtime, and bonuses that form part of regular earnings. Records should show how holiday pay was calculated, which pay elements were included, and on what basis. For irregular hours workers, the calculation itself is more complex, and records should show the reference period used.
In addition, records should cover any carry-over of leave between leave years and any payments in lieu made on termination.
What this means in practice
Three structural shifts that matter.
First, the burden of proof has moved. Before, a worker bringing a holiday pay claim had to evidence the underpayment. From April 2026, an employer who cannot demonstrate compliance is in a weaker position before any tribunal or Fair Work Agency action even starts.
Second, six years is a long retention period. Most employers' HR and payroll systems are configured for shorter retention cycles to comply with UK GDPR data minimisation. Reconciling six-year holiday pay retention with GDPR's "keep only as long as necessary" principle requires deliberate documentation of the legal basis for the longer retention.
Third, the Fair Work Agency is expected to conduct inspections without a prior complaint. This is different from the historical position where holiday pay disputes only surfaced when a worker raised them. Random inspections are expected once the agency is fully operational.
What you need in place
Five practical steps to take now if you have not already.
Audit current holiday and pay records. Identify whether your existing systems already capture the three categories of information (entitlement, leave taken, pay calculations) for every worker type you employ. If you have variable-pay workers and your holiday pay calculations are not documented, this is the most urgent gap.
Confirm 6-year retention. Check that your HR system and payroll provider can hold records for six years. If your data retention policy currently deletes holiday data on a shorter cycle, update the policy to reflect the legal basis for extended retention.
Document the legal basis for retention. Under UK GDPR you need a documented legal basis for keeping personal data. The Employment Rights Act 2025 record-keeping duty is now that legal basis for holiday data; document this in your data retention notice and your privacy policy.
Capture variable pay elements. If you employ workers paid commission, overtime, or bonuses, your holiday pay calculations need to include these elements as part of "normal remuneration." Records should show what was included and on what basis.
Brief HR and payroll teams. The new duty needs to be understood by the people who actually create and maintain the records. A two-page briefing for HR and payroll staff on what counts as adequate records, what retention period applies, and what the consequences of non-compliance are, is worth doing before the next inspection cycle starts.
Where to look for the detail
Acas guidance covers the underlying holiday entitlement at acas.org.uk/checking-holiday-entitlement. The full legislation is the Employment Rights Act 2025 (Section 35) which amends the Working Time Regulations 1998 (Regulation 16B). The Fair Work Agency's enforcement role is at gov.uk/government/organisations/fair-work-agency.
If your business has not reviewed its holiday pay record-keeping since March 2026, do that this month. Records created from 6 April 2026 onwards must meet the new standard, and a Fair Work Agency inspection could happen with no prior complaint.
How PRODICTA fits in
PRODICTA's compliance features keep holiday pay records for the six years HMRC and the Fair Work Agency require, automatically. Records cover entitlement, leave taken, and the calculations behind every holiday payment, including variable pay elements where applicable. The compliance pack exports records in a structured format if requested by the Fair Work Agency. Retention is configured by default; no additional setup is required. To see how it works, the demo at prodicta.co.uk/demo includes the compliance dashboard.