Holiday pay looks simple. From April 2026 you have to prove you got it right
- HRNews
- Jul 23
- 3 min read
What is it?
The basics have not moved. Every worker is entitled to 5.6 weeks of paid annual leave under the Working Time Regulations 1998, capped at 28 days for anyone working five days a week or more. Part time staff get the same 5.6 weeks on a pro rata basis. Bank holidays are not a separate legal entitlement, so whether they sit inside or on top of the 28 days is entirely a matter for the contract.
What has changed is the burden of proof. From 6 April 2026, section 35 of the Employment Rights Act 2025 amended the Working Time Regulations to require every employer to keep adequate records showing they have complied with holiday entitlement and holiday pay rules. Those records must be kept for six years from the date they were made.
There is no prescribed format. A spreadsheet or your existing payroll system is fine, provided it actually shows what it needs to show: leave taken, entitlement including any accrued under the 12.07% method for irregular hours and part year workers, leave carried forward, how holiday pay was calculated and which pay elements were included or excluded, and any payment in lieu on termination.
Failing to keep adequate records is a criminal offence, and enforcement sits with the Fair Work Agency, which launched in April 2026. The duty is not retrospective, so it bites from 6 April 2026 forward, but a gap from that date onwards is actionable now.
What does it mean for you?
This one arrived quietly. It was left out of the government's implementation roadmap and out of the Department for Business and Trade's 2026 timeline, and only surfaced when the commencement regulations were published a week or so before it took effect. Plenty of employers still do not know it exists.
✅ Audit what you actually record. Most employers track days taken. Far fewer record how the pay figure was arrived at, and that is the bit under scrutiny.
✅ Check your holiday pay calculation while you are in there. Four weeks must be paid at normal remuneration, which includes regular overtime and commission. The remaining 1.6 weeks can be paid at basic. If your payroll pays everything at basic, that is a live underpayment risk and your new records will document it.
✅ Get your worker categories right. The 12.07% accrual method and rolled up holiday pay are available for irregular hours and part year workers only, for leave years starting on or after 1 April 2024. Using rolled up pay for anyone else is unlawful, and it must appear as a separate line on the payslip.
✅ Fix your retention policy. Six years is longer than many businesses keep anything. Make sure the data survives a payroll provider change or a system migration.
✅ Write down your bank holiday position. If your contracts are vague about whether the eight bank holidays come out of the 28 days, this is the year to sort it.
How Lansbury HR can help.
We are running holiday pay and record keeping reviews for employers across South Derbyshire, checking that entitlement, calculation and retention all line up before anyone from the Fair Work Agency asks. Where contracts are unclear on bank holidays or worker categories have drifted, we will tell you plainly what needs changing and help you do it. If you would like a second pair of eyes on yours, get in touch.
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