The requirement for all employers to keep records of annual leave for six years will come into force on 6 April 2026.

It’s not an exciting development but it is important – so what will this look like in practice?

What details will we now need to keep?

Employers will be required (under new Reg 16B of the WTR 1998) to keep records to demonstrate that all eligible workers (including irregular hours and part-time workers) have been apportioned the paid holiday they are entitled to under the WTR 1998.            

How detailed do they need to be?

Reg 16(b) notes that the records must be ‘adequate’. There is no prescribed form, and the type of records may differ from employer to employer, according to the systems available and the nature of the workforce.  However, what these records must have in common is sufficient information to demonstrate compliance with this new requirement.   

What will happen if we don’t keep them?

Failure to comply with the relevant requirements of the WTR 1998 is a criminal offence and a potentially expensive one.  If an employer is prosecuted in the Magistrates' Court, the magistrate may award an unlimited fine for failure to keep records.  If the matter goes to the Crown Court again, an unlimited fine could be awarded. 

Aside from this aspect, it’s also important to note that inadequate records will be of very little help should a worker bring a claim for holiday pay. Records which set out a worker’s holiday entitlement and details of payment (whether that be as they take it, or rolled up holiday pay for atypical workers) will provide a robust defence to such a claim.

We have only kept them for three years in the past; will that count against us?

As far as we understand, this provision is NOT retrospective. The requirement will start on 6 April 2026 when the requirement comes into force. However, inspections of holiday pay records are likely to be carried out well prior to an employer having had to retain six years’ worth of records, and so a gap or a failure to keep records from 6 April 2026 would be actionable. 

Will the Fair Work Agency issue a claim against the organisation? 

As many of you will be aware, from April 2026, the Fair Work Agency will become the new enforcement agency for issues such as national minimum wage/holiday pay/statutory sick pay, etc. The Employment Rights Act 2025 gives the Agency substantial powers of enforcement, not least the power to issue a notice of underpayment for failure to pay holiday pay or NMW or other entitlements. With this notice will come a fine of 200% of the amount owed. Whilst the failure to keep holiday records will not attract this type of fine as it is not an underpayment, failure to ensure compliance with holiday pay could inevitably lead to underpayments and so attract this 200% fine. 

What should you do?

• Audit your current records for monitoring holiday entitlement and pay.
• Are they sufficiently clear or do improvements need to be made? Do they put the organisation at risk if they remain as they are?
• Ensure that your systems have been changed so that these records are now kept for six years in accordance with new Reg 16(B)

If you would like further advice on this new provision or on any other compliance issues, please contact us.