New Holiday Record Keeping Requirements from April 2026: Are You Compliant?

Since 6 April 2026, employers have been legally required to keep detailed records showing that workers receive their correct holiday entitlement and holiday pay, and to retain them for at least six years.

The underlying holiday entitlement and holiday pay rules have not changed. What is new is a clear legal obligation to keep records showing that employers are complying with those rules. Failing to keep adequate records is a criminal offence, punishable by a fine.

Records can be kept in any suitable format, including a payroll or HR system or a spreadsheet, provided they contain the required information. They must be kept for six years from the date they were made.

Why does this matter?

The requirement was introduced in response to widespread evidence of non-compliance with holiday rules. Common issues include:

• Zero-hours workers being wrongly told they have no holiday rights
• Holiday rights not being protected during sickness absence or parental leave
• Holiday pay and entitlement being miscalculated for different categories of workers

Employers may face enforcement action where they cannot show they have kept the required records. Holiday pay enforcement is set to fall to the new Fair Work Agency, which launched on 7 April 2026.

Employers should not assume that paying everyone through payroll makes their holiday records sufficient. Payroll records may show what was paid, but employers also need to be able to demonstrate entitlement, leave taken, carry-over and how holiday pay was calculated.

Who does this affect?

The requirements apply to all types of workers, including full-time, part-time, zero-hours, irregular-hours and part-year workers. Employers should pay particular attention where workers have variable hours, overtime, commission or other payments that may affect holiday pay.

What must records show?

• Holiday entitlement: how much holiday each worker is entitled to and how it was calculated.
• Holiday taken: the dates and amount of holiday taken in each holiday year.
• Holiday carried over: any holiday carried forward from a previous year and, where relevant, the reason.
• Holiday pay: how holiday pay was calculated, including the elements of pay considered.
• Payments in lieu: any payment for unused holiday when employment ends.
• Opportunity to take holiday: that workers have had a reasonable opportunity to take their statutory entitlement.

The key change is the need to demonstrate compliance. Your records are your evidence.

Holiday entitlement

All workers are entitled to 5.6 weeks’ paid holiday each year, capped at 28 days. A worker who normally works five days a week will generally be entitled to 28 days’ paid holiday.

Part-time workers are entitled to the same 5.6 weeks, calculated according to their working pattern. For example, a worker who normally works three days a week would generally receive 16.8 days’ holiday (3 × 5.6).

Holiday pay

Fixed hours and pay

Where a worker’s hours and pay do not vary, holiday pay is calculated at their normal rate of pay.

Example: An employee works 35 hours a week and is paid £400 a week. If they take one week of holiday, they should receive £400 in holiday pay.

Variable hours or pay

Where a worker has irregular hours or variable pay, holiday pay is based on their average pay over the previous 52 weeks. If they have been employed for less than 52 weeks, the calculation uses the number of complete weeks worked.

Weeks with no pay for time worked, such as sick or parental leave, should be excluded, with earlier weeks included instead, going back up to a maximum of 104 weeks.

The 52-week average applies differently to different parts of the entitlement:

• First 4 weeks of leave: must use the 52-week average and reflect normal remuneration.
• Additional 1.6 weeks: may be calculated using basic pay only, for example a daily rate based on salary.

What counts as normal remuneration?

Holiday pay must reflect “normal remuneration”, not just basic pay. This may include:

• Regular overtime and commission payments
• Allowances linked to the role, such as shift payments or travel allowances
• Payments linked to professional qualifications or length of service
• Other regularly made payments

The exact treatment depends on the nature of the payment and the worker’s circumstances.

What about bonuses?

Whether a bonus should be included depends on how it operates. A bonus is more likely to need including where it is performance-related, regular and recurring, or linked to the work carried out, attendance or another aspect of the employee’s normal work. A genuinely discretionary or occasional bonus may not need to be included.

Employers should document the basis for excluding any payment from holiday pay calculations. Decisions to exclude a bonus may still be challenged on inspection, depending on how the bonus is structured and paid.

Irregular-hours and part-year workers

If you employ zero-hours, casual, seasonal or other irregular-hours workers, the holiday rules are different. For leave years starting on or after 1 April 2024, qualifying irregular-hours and part-year workers use a specific method to calculate holiday entitlement.

The 12.07% accrual method

Holiday entitlement is generally calculated as hours worked × 12.07%. The figure reflects the statutory 5.6 weeks’ holiday compared with the remaining 46.4 working weeks in a year.

Example: A worker works 30 hours in a pay period. 30 × 12.07% = 3.621, so they accrue approximately 3.6 hours of holiday for that period.

Note that 12.07% is a method for calculating holiday entitlement. It is not automatically a method for calculating holiday pay.

Rolled-up holiday pay

For qualifying irregular-hours and part-year workers, employers can choose to use rolled-up holiday pay. Instead of paying holiday pay when the worker takes leave, an additional amount is paid with their normal pay, generally 12.07% of their total pay for the pay period. It must be shown separately on the payslip.

Example: A worker earns £500 in a pay period. £500 × 12.07% = £60.35, so they receive £500 normal pay plus £60.35 holiday pay.

Rolled-up holiday pay cannot be used for ordinary regular-hours employees. Alternatively, employers can pay holiday when the worker takes leave, using the applicable holiday pay calculation.

Employer checklist

• Do we know the correct holiday entitlement for every worker?
• Do our records show the dates and amount of holiday taken?
• Do we record holiday carried forward and the reason?
• Do we know which elements of pay should be included in holiday pay?
• Are regular overtime and commission being treated correctly?
• Are bonuses being assessed appropriately?
• Can we explain our calculations and which elements of pay they include?
• Are we using the correct rules for irregular-hours and part-year workers?
• If using 12.07%, are we using it for the correct purpose?
• If using rolled-up holiday pay, is it being calculated and shown correctly?
• Can our payroll or HR system retain and retrieve the records for at least six years?
• Can we demonstrate that workers have had the opportunity to take their statutory holiday?

If you are unsure whether your current holiday records, entitlement calculations or holiday pay arrangements meet the requirements, our payroll team can help you review them.