New 6-year holiday pay record-keeping rules: What employers need to know

From 6 April 2026, UK employers face a significant new legal duty: you must keep detailed records of holiday entitlement, holiday taken, and holiday pay calculations for a minimum of six years. These changes coincide with the introduction of the Fair Work Agency (FWA), a new enforcement body with wide-ranging powers to investigate and penalise employers who fail to comply.

What employers are now required to record

• Holiday taken by each worker
• Holiday carried forward
• Detailed holiday pay calculations, including which pay elements are included (for example, overtime, bonuses and commission)
• Payments in lieu of holiday

Records must be kept for at least six years and can be stored in any reasonable format, provided they are accurate, complete and easily retrievable.

Why this matters: New risks for employers

1. Non-compliance
   Failure to maintain adequate records may amount to a criminal offence, carrying the risk of unlimited fines.
2. Strengthened enforcement by the Fair Work Agency
   The FWA can conduct unannounced inspections, seize documents and issue significant penalties.
3. Increased scrutiny of holiday pay calculations
   Holiday pay for variable hours, part-year workers, and those with overtime or commission must now be clearly evidenced.
4. Six-year retention requirement
   Employers must ensure their systems and processes allow long-term retention and retrieval of historical data.

Why you should review your processes now

• Current systems may not capture all required data
• Employers must be able to produce detailed calculations on demand
• Early enforcement activity is expected

As this requirement takes effect from April 2026, you must ensure that all records created from now are kept for the full six-year period.

What employers should do next

• Review calculation methods for all worker types and ensure these are accurate
• Document your methodology clearly
• Ensure records are maintained and kept up to date

Need help?

You can find our employer bulletin, including a helpful comparison of all holiday pay types, here.

If you’d like us to review your payroll processes or guide you through the new requirements, we’d be happy to help. Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Dannielle Chapman