From 06 April 2026, a new and unexpected compliance obligation comes into force under the Employment Rights Act 2025.
Employers must now create and retain records showing compliance with statutory holiday entitlement rules, and keep them for at least six years.
This is a curveball for employers given there was no indication prior to these regulations being published that this requirement was going to come into force in April.
What’s changing on 06 April?
The ERA inserts a new regulation 16A into the Working Time Regulations 1998. It introduces a clear legal duty on employers to maintain holiday and holiday pay records for at least six years, showing compliance with:
Statutory annual leave entitlement
- Including the core four-week entitlement
- Additional statutory leave
- Calculations for irregular hours workers
Holiday pay calculations
- Including how holiday pay is calculated
- Including how much holiday pay employees are entitled to on termination
Employers can use any reasonable format or system, but the key requirement is that records are sufficient to demonstrate compliance.
Non-compliance
Crucially, failure to comply with this new obligation may amount to a criminal offence, punishable with a fine.
Why this matters for employers
Most employers will have a decent record of holiday pay and entitlements. But this change raises the bar in three key ways:
1. Longer retention requirements – six years is a significant step up. Your systems must be able to store, access, and retrieve historic data reliably over a significant time period.
2. Increased scrutiny – holiday pay remains a complex area, particularly where overtime, commission, or variable pay is involved. These calculations now need to be clearly evidenced and retained.
3. Increased enforcement risk – with the Fair Work Agency launching on 07 April, record-keeping failures are far more likely to be scrutinised. It wouldn’t be surprising to see early enforcement action aimed at demonstrating the Agency’s ‘teeth’.
What should employers do now?
This is one to act quickly with to ensure everything is in order.
1. Audit current records – what are you recording now? Is it enough to demonstrate compliance? If not, identify the gaps and how you’re going to fill them.
2. Check retention periods – do your systems retain holiday and pay data for at least six years? If not, you need a plan to address this. Quickly.
3. Test those systems – do they allow you to easily retrieve six years’ worth of data if required?
4. Review holiday pay calculations – ensure your approach is accurate, consistent, and clearly documented, especially for workers with variable pay.
5. Update policies and processes – make sure your holiday, payroll, and data retention documentation reflects the new requirement, and your teams are recording and calculating holiday consistently in practice.
What else is happening in April?
The published regulations also confirmed the implementation of everything else we were expecting to come into force in April:
From 06 April
- SSP – becomes payable from day one of absence. The lower earnings limit is also removed.
- Collective consultation – protective awards for failing to comply with collective consultation requirements increase to 180 days’ gross pay.
- Sexual harassment – becomes a protected disclosure for the purposes of whistleblowing protections.
- Trade unions – recognition processes are simplified.
From 07 April
- Fair Work Agency – established with broad enforcement powers.
Need to chat?
Give us a shout if you need to chat about any of the changes coming into force next week. Our Intelligent Employment platform is also primed and ready with all the updated documents you require.
This update is accurate on the date it was published but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.
