Annual Leave and Holiday Pay Records - The Six-Year Duty That Arrived in April 2026

On 6 April 2026, with very little fanfare, UK employers acquired a criminal-law duty to keep records of annual leave and holiday pay. The duty arrived through section 35 of the Employment Rights Act 2025, which inserted a new regulation 16B into the Working Time Regulations 1998.

The wording is short and the consequences are not. Records must be adequate to show compliance with the leave and holiday pay entitlements, they must be kept for six years, and failing to keep them is a criminal offence punishable by a fine.

Many employers have still not caught up, partly because the change was not trailed the way the headline Employment Rights Act reforms were. This guide covers what the records must show, how the duty interacts with rolled-up holiday pay, and the system changes worth making now.

The Duty at a Glance

Where the Duty Comes From

Regulation 16B requires employers to keep records "adequate to show" compliance with the core holiday provisions: the basic four weeks of leave, the additional 1.6 weeks, the accrual rules for irregular hours and part-year workers, payment for leave, and pay in lieu of untaken leave on termination.

It sits apart from the older regulation 9 duty to keep working time records, which covers the 48-hour week and night work and carries only a two-year retention expectation. The new holiday duty has its own six-year clock, running from when each record was made.

Format is genuinely flexible. The regulation says records may be created, maintained and kept in any manner the employer reasonably thinks fit, and Acas guidance confirms a payroll system or a spreadsheet can do the job, provided the content is there.

What the Records Must Actually Show

Adequate to show compliance is an evidential test, not a form-filling one. In practice, Acas frames it as four categories of record for each worker:

• Holiday taken, against the entitlement it counts toward
• Holiday carried over from previous years
• Holiday pay, including what went into the calculation, such as bonuses, commission and regular overtime
• Payments in lieu of holiday, such as pay for unused leave when someone left

The weak point in most systems is the third item. A payslip that shows a total is not adequate to show the pay was calculated correctly; the record needs to evidence what elements were included and for which period.

Rolled-Up Holiday Pay and Irregular-Hours Workers

For irregular hours and part-year workers, leave accrues at 12.07 per cent of hours worked in each pay period, and employers may pay rolled-up holiday pay as a 12.07 per cent uplift paid at the same time as normal pay. Both mechanics generate exactly the records regulation 16B expects to see.

The accrual calculation for each pay period evidences the entitlement, and the itemised payslip must show the holiday pay element separately. If your payroll rolls holiday pay into a single line, that is the first thing to fix; the wider zero-hours reforms will only increase scrutiny of how variable-hours staff are paid.

What Happens If You Do Not Keep Them

Failing to keep regulation 16B records is a criminal offence under regulation 29 of the Working Time Regulations. On summary conviction the fine is unlimited in England and Wales, and proceedings can be brought by the Secretary of State, in practice through the Fair Work Agency, which launched the day after the duty commenced.

The realistic risk for most employers is not a prosecution out of the blue. It is that missing records turn a defensible holiday pay dispute into an indefensible one, because the burden of showing compliance falls on evidence only the employer was supposed to keep.

Why Six Years - Enforcement Is Coming in 2027

The government has been explicit that the record duty exists to support Fair Work Agency enforcement of holiday pay itself from 2027. A consultation on holiday pay compliance and enforcement, open until 22 September 2026, proposes FWA investigations reaching six years back, with civil penalties modelled on minimum wage enforcement.

Read together, the message is straightforward. The records you are required to build now are the evidence base a regulator will test later, and gaps in 2026 records will still be visible in 2032.

The Procedure and System Changes to Make

Check your payroll and HR systems against the four Acas categories, and confirm reports can be produced per worker, per leave year. Where holiday pay includes variable elements, make the calculation basis part of the record rather than something reconstructed on request.

Update your annual leave policy and payroll procedures to name the records kept, where they live, and who owns them, and extend your retention schedule to six years for this category. Our guide to the UK annual leave regulations covers the underlying entitlements the records must evidence.

HR Policy and Procedure Writers

Policy Pros writes the documents this duty touches: annual leave policies, payroll and record-keeping procedures, retention schedules and the handbook wording that ties them together. Our HR policy writing service can bring your leave documentation up to the April 2026 position as a single, consistent update.

If your leave records could not currently show six years of compliance, contact us for a free quote, or call 020 3951 2875.