What The New Six-Year Records Rule Means For Your HR and Payroll Processes

UK employers now face stricter obligations around holiday pay compliance following the introduction of the Employment Rights Act 2025. Employment Hero explains that, from 6 April 2026, businesses must retain annual leave and holiday pay records for a minimum of six years, making robust record-keeping an essential part of HR and payroll compliance.

The new rules require employers to keep adequate records showing statutory holiday entitlement, leave taken, holiday pay calculations and any payments made in lieu of untaken holiday. While records can be stored digitally or on paper, they must be detailed enough to demonstrate compliance if requested by regulators. Failure to maintain appropriate records is now a criminal offence, with unlimited fines possible for non-compliance. The newly established Fair Work Agency is expected to play a significant role in enforcing these requirements from 2027.

Employment Hero recommends reviewing existing HR and payroll systems, updating document retention policies, ensuring leave and payroll data remain accurate, and improving collaboration between HR and payroll teams. By strengthening record-keeping processes now, organisations can reduce compliance risks and be better prepared for future audits.

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