The government has just released commencement regulations which will bring certain provisions of the Employment Rights Act 2025 into force on 6 April 2026. The majority of the provisions were expected, however, one unexpected development is that the new requirement to keep holiday entitlement and pay records will also come into effect on that date. Prior to the regulations being published there had been no indication that this obligation was going to come into force this April as the new duty was omitted from the government's implementation roadmap from last summer and the Department for Business and Trade’s timeline for changes being introduced in 2026, published on 11 February.
What is the current position regarding holiday pay records and how will it change on 6 April?
Whilst considered good practice to have systems in place to track and record annual leave taken and payments made, there is currently no specific obligation to keep records demonstrating compliance with holiday entitlement and pay (except for 'employment businesses' – ie. businesses providing agency workers).
From 6 April employers will need to keep "adequate" records to demonstrate their compliance with workers' rights to paid annual leave under the Working Time Regulations 1998 (WTR).
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.
Employers will be required to keep records in relation to all eligible workers – including people working irregular hours and part-year workers.
The records can be created, maintained and kept in such manner and format as the employer reasonably considers appropriate, however, employers will be required to retain such records for six years from the date on which they were made.
What will happen if an employer does not comply with the new duty?
Failure to comply will amount to a criminal offence (punishable by fine). In due course, enforcement of holiday obligations is expected to fall within the remit of the new Fair Work Agency (FWA), which will be launched the following day on 7 April 2026. The FWA will be a single labour market enforcement body and will take over the functions of the various different existing enforcement bodies, covering minimum wage, statutory sick pay, modern slavery, and it will also be given responsibility for enforcing rights to holiday pay. However, no enforcement regulations have been produced yet transferring enforcement powers from the HMRC to the FWA in relation to holiday pay, NMW and sick pay. Until that happens the FWA cannot enforce these new powers. The significant powers provided to the FWA show that the government intends it to have real teeth, although in practice its ability to act will largely depend on how well it is resourced and funded.
Changes to SSP
One other point of note is that the commencement regulations make no mention of one significant change due to come into effect in April: the removal of waiting days and the lower earnings limit for SSP. We would be very surprised if this did not come in as planned on 6 April and it is possible that separate commencement regulations dealing with these changes will still be published in the coming days.
Update on 27 March – the government has now published the SSP commencement Regulations. They confirm that the SPP changes will come into force on 6 April, as expected.
What does this mean for employers?
For some employers this new record keeping requirement will impose a significant additional administrative burden. Employers should take active steps now to review their position and consider where there may be gaps in this information that need to be rectified.
For further information on the changes coming into force in April please see our previous article and our Employment Rights Act tracker.
