This week, it was announced that a new legal duty requiring employers to keep detailed holiday records will come into force on 6 April 2026.

While this may sound like an administrative change, it has serious legal implications. Employers who fail to comply could face criminal penalties, making it essential to act now.

In this blog, we explain what’s changing, why it matters, and what steps you should take to stay compliant.

A shift towards stricter compliance

Employers have always needed to ensure workers receive their statutory holiday entitlement. However, this new duty goes further by requiring businesses to actively evidence compliance through proper record keeping.

This reflects a wider trend in employment law towards increased enforcement and accountability, rather than relying on employees to bring claims.

What records do employers need to keep?

From April 2026, employers must keep adequate records of:

• Annual leave taken
• Leave carried over
• Holiday pay calculations
• Payments in lieu of untaken leave

There is no set format, but records must be clear, accurate and accessible.

If challenged, employers must be able to demonstrate that workers have received their full legal entitlement.

How long must records be kept?

Holiday and holiday pay records must be retained for at least six years.

This means employers need systems that are not only accurate, but also secure and reliable over time.

Why this matters for employers

This change is more than a paperwork exercise—it creates real legal and financial risk.

• Failure to keep adequate records will be a criminal offence
• Employers could face unlimited fines
• Poor records make it harder to defend holiday pay claims

We often see issues arise where pay varies due to overtime, commission or irregular hours. Without proper records, defending these claims becomes significantly more difficult.

Where employers are most at risk

From our experience advising clients, the biggest risks tend to come from:

• Manual or inconsistent holiday tracking
• Lack of alignment between HR and payroll
• Incorrect holiday pay calculations
• Poor record retention practices

These issues are common, particularly in growing businesses where systems haven’t kept pace with operational complexity.

Getting your processes right

Taking a proactive approach now will help reduce risk later.

1. Review how holiday is tracked

Ensure your system accurately records leave across the organisation.

2. Check holiday pay calculations

Particularly for employees with variable pay, ensure calculations are correct and well documented.

3. Align HR and payroll

Holiday records and pay data must be consistent and joined up.

4. Improve record retention

Make sure records are stored securely and can be accessed for at least six years.

Using the right HR systems

Manual processes significantly increase the risk of error and non-compliance.

At Bhayani Law, we partner with MyHRToolkit, a user-friendly HR system that helps employers:

• Track annual leave accurately
• Maintain compliant holiday records
• Reduce administrative burden
• Improve visibility across teams

Using a system like MyHRToolkit can make it much easier to meet your legal obligations and avoid costly mistakes.

How Bhayani Law can help

We support employers in preparing for upcoming legal changes and managing day-to-day HR challenges.

Our services include:

• Holiday pay and compliance audits
• Advice on record-keeping obligations
• Implementation of HR systems including MyHRToolkit
• Policy updates and manager training
• Ongoing support through our Watertight HR & Legal service

For a free quote or to discuss how we can support your business, contact us today on 0333 888 1360 or complete our enquiry form.