At a Glance
In an unexpected development, recent commencement regulations confirm that from 6 April 2026, the new legal duty requiring employers to keep adequate records of workers’ annual leave and pay entitlements will come into effect. The timing of this new requirement, introduced under the Employment Rights Act 2025 (‘ERA 2025’), was previously unknown and had not featured in the Government’s previously published implementation timelines.
The key elements of the new record-keeping obligation to be aware of:
- Employers will be required to keep “adequate” records to demonstrate compliance with entitlement to annual leave (including additional annual leave and annual leave of irregular hours and part-year workers), entitlement to holiday pay, and the requirement to make payment in lieu of holiday outstanding on termination of employment (including any carried over)
- Employers will have discretion to create, maintain and keep the records in such manner and format as they reasonably see fit
- Records must be retained for six years from the date of creation
Enforcement
Failure to comply with this new duty will be an offence, punishable by a fine.
The Fair Work Agency, set to be established on 7 April 2026 as part of the ERA 2025 reforms, is anticipated to play a central role in enforcing compliance. In due course, it will have a range of enforcement powers, including to request records, issue notices of underpayment, and bring employment tribunal proceedings on a worker’s behalf. However, whilst some of the Fair Work Agency’s powers will take effect on 7 April 2026, this does not currently include its enforcement powers in respect of annual leave and pay or annual leave records. These powers are expected to follow in phases and we await further developments.
Impacts for Employers
This new record-keeping requirement is likely to increase the administrative burden on businesses. Whilst many employers will already have some systems in place to record annual leave information, these processes should be reviewed to ensure that all annual leave and pay entitlements are accurately tracked and documented and can be retained for six years. Employers may want to assess their existing annual leave and pay records and consider taking remedial steps where necessary, given the increased enforcement risk.
For further information on the latest developments, please visit our Reform Hub.
Please contact your usual Littler contact if you would like any support with preparing your business for the upcoming changes. For any client training queries, please contact Natasha Adom.
