From 6 April 2026 a new obligation to keep records of paid holiday taken by employees and workers, including agency workers, comes into force. Since the introduction of the Working Time Regulations in 1998 there’s been an obligation to give all employees and workers statutory paid holiday, the obligation to keep records is new.

In future employers (including umbrella companies) and employment business (“agencies”) will need to keep “adequate” records to show they have:

1. Given employees and workers the correct amount of statutory paid holiday (currently 5.6 weeks’ in each holiday year).
2. Calculated and paid the correct holiday pay.
3. Made payment in lieu of any unused paid holiday when a contract, and in the case of agency workers, an assignment, has terminated (including any paid holiday they were legally entitled to carry over from the previous holiday year).

These records must be retained for six years. The format and manner of keeping the required records is left up the employer/employment business, although there may be guidance on this from the Fair Work Agency (FWA) in due course. But all businesses would be wise to ensure their records are clear, accurate and accessible.

The FWA may not be in enforcement mode immediately it comes into effect on 7 April 2026, but when it is it will be able to take retrospective action back to December 2025 (i.e. to when the Employment Right Act 2025 came onto the statute books). Clear, accurate records will be critical if employers and agencies are to be able to demonstrate compliance. In addition, failure to keep adequate records will be a criminal offense, carrying the potential for unlimited fines. And where paid holiday is paid incorrectly the FWA will be able to impose penalties of 200% of any underpayment (capped at £20,000 and reduced to 100% if paid within 14 days).

Next steps

Many agencies and umbrella companies engaging and supplying agency workers calculate holiday pay in real time and pay it on top of the workers’ pay rates, on an ongoing basis. This may help to simplify the holiday pay calculation and to ensure workers are always up to date with their paid holiday accrual, but care still needs to be taken to ensure those agency workers take time off. If they have been paid for time off but haven’t actually taken it, they have effectively been paid in lieu of their statutory paid holiday entitlement, which is unlawful.

Overall, employers and employment businesses need to check their current paid holiday records for “adequacy”. A review of current processes may be needed to ensure the records being kept are correct, accurate and up to date and can be retained for the requisite 6 years. Be sure to include records of communications sent encouraging employees and workers to take their paid holiday, as well as records of any circumstances that have prevented them from doing so, giving them a right to carry it over into a new holiday year.