Holiday Pay Records: What the New Law Means (And How to Get Compliant Fast)

If you're still tracking staff holidays on a spreadsheet or an email chain, keep reading.

6 April 2026 was a big day for employment law. Two significant changes landed at once: every UK employer must now keep detailed records of annual leave and holiday pay for at least six years and Statutory Sick Pay rules were overhauled in ways that affect almost every business in the country. Both came from the same piece of legislation, with barely two weeks' notice. The enforcement body set up to police them launched the very next day.

It's a lot to land at once. This article breaks down exactly what's changed, what you need to record and what's at risk if you don't. It also shows how the right tool makes compliance something that just happens, rather than something you have to think about.

What Changed on 6 April 2026?

The Employment Rights Act 2025 introduced a formal duty for employers to maintain 'adequate' records of statutory holiday entitlement and pay. It came in through Section 35 of the Act, which amends the Working Time Regulations 1998.

Until now, tracking annual leave was largely informal. There was no explicit legal requirement to document holiday payin detail - only to make sure workers got their entitlement. That has changed.

From 6 April 2026, you need to record:

• Ordinary and additional annual leave taken by each employee
• Leave carried forward from one year to the next
• Holiday pay calculations, including which elements of pay were included or excluded
• Payments made in lieu of leave, including any carried-over entitlement that was paid out

Records must be kept for a minimum of six years. There's no prescribed format, but they must be clear, accurate and accessible on request.

"If you're still tracking leave in Excel, the Employment Rights Act 2025 should be your wake-up call. Employers now need six years of accurate records, and with Day 1 statutory sick pay now in force, that means holiday, sickness and everything in between. Turbine handles it all in one place and makes it effortless."

Juliet Glanville, Head of People, Articulate Marketing

What Else Changed: Statutory Sick Pay

The holiday pay record-keeping duty wasn't the only change that landed on 6 April 2026. Section 10 of The Employment Rights Act 2025 has significantly overhauled Statutory Sick Pay.

Three things changed at once:

• SSP is now payable from day one. The previous three unpaid waiting days have been removed. If an employee is sick, SSP starts on the first qualifying day of absence.
• The lower earnings limit has been abolished. Previously, employees needed to earn above a minimum threshold to qualify. That threshold is gone, extending SSP to an estimated 1.3 million additional workers, including many part-time and lower-paid staff.
• The rate has changed. SSP is now paid at either the statutory flat rate of £123.25 per week or 80% of the employee's normal weekly earnings, whichever is lower.

For small businesses, the practical impact is straightforward: more employees now qualify, payments start earlier and the calculation is different. If your payroll process hasn't been updated to reflect this, it needs to be.

The Fair Work Agency will also have powers to enforce SSP payments once fully operational, so this isn't an area to leave to chance.

Who Is Checking?

The Fair Work Agency launched on 7 April 2026, one day after the record-keeping duty came into force. It has the power to inspect employer records and take enforcement action where businesses aren't compliant. Once fully operational, it also has the power to publicly name non-compliant employers and charge fines up to 200% of the underpayment amount (subject to a minimum of £100 and a maximum of £20,000 per individual). No tribunal claim required. The Agency can conduct unannounced inspections, issue civil penalties and name businesses that aren't playing by the rules entirely off its own back.

The Agency was built specifically to enforce employment rights. Holiday pay has been one of the most contested areas between employers and workers for years, and inadequate records make it very hard to defend a claim if one arises.

"The Employment Rights Act 2025 has changed the rules for UK employers overnight. From 6 April 2026, inadequate holiday records aren't just an employment tribunal risk. They're a criminal offence. We learned quickly that spreadsheets weren't up to the job. They can't calculate entitlements accurately for part-time workers, they leave no audit trail, and they won't satisfy the new Fair Work Agency. Turbine gives us the records we need to prove compliance, and the peace of mind that we're not one formula error away from a serious liability."

Mirela Mart, CFO, Articulate Marketing

Why This Caught So Many Businesses Off Guard

Less than two weeks' notice. No transitional arrangements. No statutory guidance. The government didn't exactly roll out the welcome mat on this one.

For small businesses running HR through spreadsheets, calendar tools or paper forms, the gap between current practice and legal requirement can be significant. It's not just about logging who took time off. It's about documenting the financial calculations behind what they were paid for it. That's a different level of detail entirely.

What 'Adequate Records' Actually Means in Practice

The legislation doesn't define the exact format, but the intent is clear. If the Fair Work Agency or an employment tribunal asked to see your records, you'd need to show a complete and accurate picture for any employee going back six years.

In practice, your system needs to show:

• The dates and duration of every period of leave taken
• Whether it was ordinary statutory leave, additional contractual leave or carried-over leave
• What rate of pay was applied and how it was calculated
• Any leave that couldn't be taken and was paid out instead

A note in a shared calendar doesn't cut it. A spreadsheet that only logs days off doesn't either.

The Risk of Getting It Wrong

Non-compliance opens businesses up to two problems.

The first is enforcement action from the Fair Work Agency. The second, arguably the bigger one, is exposure in an employment tribunal. If a worker brings a holiday pay claim, inadequate records make it extremely difficult to demonstrate that you paid correctly. In a dispute, the burden of proof sits with the employer.

Holiday pay claims can also be backdated. A failure to keep adequate records for six years isn't just a compliance issue but also a financial one.

There's a third risk that doesn't get talked about enough: your reputation. For a small business, being publicly identified as an employer that doesn't meet its legal obligations affects hiring, trust and how customers see you. A fine is recoverable but reputation takes much longer.

"Since 6 April 2026, adequate holiday records aren't optional. They are a legal requirement, and non-compliance is a criminal offence. The same Act introduced Day 1 statutory sick pay, which means your records need to be accurate across every leave type, not just holiday. Spreadsheets don't cut it anymore. Turbine gives us one reliable system that keeps Articulate audit-ready without the admin burden."

Mirela Mart, CFO, Articulate Marketing

How to Get Compliant: A Practical Checklist

Here's what HR teams and business owners should do now.

1. Audit your current records. Go back and look at what you actually hold. Can you produce a clear record of leave taken and pay calculations for every employee for the past six years? If not, work out where the gaps are.

2. Check your data retention policy. Your privacy and data retention policies need to reflect the six-year requirement. If you're deleting HR records before that point, update your policy now.

3. Review how holiday pay is calculated. Make sure you know which elements of pay should be included in holiday pay calculations. This has been an active area of case law in recent years, covering commission, regular overtime and allowances. If you're unsure, take advice.

4. Choose a record-keeping system that captures the right detail. A tool that only logs leave taken isn't enough anymore. You need something that records pay calculations alongside leave, creates an auditable trail and holds data for the required period.

5. Brief your team and update your policies. Anyone who approves leave or processes payroll needs to understand what's now required. The record-keeping duty runs across the whole organisation, not just HR. Ensure you update your policies to reflect the act changes and train staff accordingly.

How Turbine Helps

Turbine was built to take the admin weight off small businesses. Holiday and absence tracking is central to what it does, and it gives owners exactly the kind of clear, centralised and accessible records this legislation calls for.

Every leave request is logged and approved through a single portal. No lost emails. No conflicting calendar entries. No 'who approved what and when?' Everything sits in one place, with a clean audit trail behind it.

For businesses that previously managed holidays informally, switching to Turbine means compliance becomes a natural by-product of how you run HR day to day. You're not creating extra admin to satisfy a legal requirement. You're just running things properly, and the compliance follows.

Ready to get your holiday records in order? Try Turbine free and see how straightforward HR admin can be.

Summary: Key Facts at a Glance

Turbine is HR and operations software designed for small businesses. It makes holiday tracking, expense management and purchase orders simple, so you can spend less time on admin and more time on your business. Find out more at turbinehq.com