The Employment Rights Act 2025 received Royal Assent on 18 December 2025, meaning that it officially became law.
This legislation brings major changes to UK employment law as we know it, including new protections for workers.
Over the course of several blogs, we will be exploring the main changes that have been introduced by this Act and why these changes are something that both individuals and businesses alike should be aware of.
This particular blog will focus on one of the lesser-known changes, namely the introduction of a legal requirement for employers to keep holiday records in respect of their workers.
We will explore the changes that have been introduced, how employers can incorporate the changes, the consequences for employers if the changes are not implemented and what employers should do now.
What changes have come into force as a result of the Employment Rights Act 2025?
From 6 April 2026, employers are legally required to keep records of annual leave and holiday pay in respect of their workers. Prior to 6 April 2026, this was not a legal requirement.
The introduction of these new duties mean that employers are now required to demonstrate that they have complied with:
- the requirement to give workers the correct amount of annual leave (currently a minimum of 5.6 weeks’ statutory leave each holiday year for full time workers and which is applied on a pro-rata basis for part time workers)
- the obligation to make the correct payments for leave
- the requirement to make a payment for unused statutory leave when the contract terminates (including for any leave which the employee or worker was legally entitled to carry forward from the previous holiday year)
Employers must keep these records for (at least) six years from the date they were made.
How do employers need to keep holiday records?
The Act does not prescribe a particular format in which holiday records must be kept, therefore employers are free to choose the format that they think reasonable. Online management systems and spreadsheets are likely to be sensible options.
What will happen if an employer does not keep records or records are kept incorrectly?
A new government agency called the Fair Work Agency (which was launched on 7 April 2026) will have powers to take enforcement action against employers who do not comply with their holiday and holiday pay duties.
Failure of employers to keep adequate records dating back to 6 April 2026 will be a criminal offence and punishable with potentially unlimited fines. If records reveal that employers have calculated holiday pay incorrectly, the Fair Work Agency will be able to demand the underpayment and will be able to impose a penalty on top. The penalty will be 200% of the underpayment (capped at £20,000 per underpaid individual), halved to 100% if the penalty is paid within 14 days.
Moreover, it is understood that over time, the Fair Work Agency will have retrospective powers and will be able to take action against underpayments of holiday going back to 18 December 2025, when the Act received Royal Assent.
What do employers need to do now?
Employers will need to have a thorough review of their holiday and holiday pay records. Many employers will already be keeping adequate records, however they should check how these systems operate and ensure they are robust if weaknesses are detected. Employers will also need to consider how they are going to store these records for the required retention period (six years).
Evidence of compliance will be key, so keeping copies of emails encouraging employees to use their leave up before the end of the holiday year and/or to show rollover of holidays where (for example) a worker has been prevented from taking them will be deemed to be good practice in these types of matters.
For expert advice on an employment law matter, email partner and head of employment Nick Smith on nsmith@mincoffs.co.uk or call the office on 0191 281 6151 to speak to a member of the team.
