The new employer annual leave and pay record keeping rules are in effect

Employers have had a fair few reforms to understand and comply with since the Employment Rights Act (ERA) 2025 came into effect on 6 April 2026. 

Much of the focus around the Act has been on reforms in the workplace, but there is one development that has been overlooked. 

There is a new legal requirement for employers to maintain comprehensive records of annual leave and pay for a minimum of six years. 

You need to make sure this reform has not slipped under the radar and that you are clear on your duties for this. 

What has changed? 

Under Regulation 3(8) of the Employment Rights Act 2025 commencement regulations, Section 35 of the Act came into force. 

This places a statutory duty on employers to keep “accurate, complete” records relating to employees’ annual leave entitlement and pay. These records must now be retained for at least six years. 

Despite the important change, the amendment has received little public attention and does not feature in the Department for Business and Trade’s published implementation timeline for the Plan to Make Work Pay or the Employment Rights Act 2025. 

As a result, many employers may be unaware of the requirement and be putting their compliance at risk. 

What does this mean for employers? 

While many employers will already hold information on annual leave and pay, your existing processes should now be reviewed to ensure they meet this new legal standard. 

Employers should be able to demonstrate: 

• Annual leave entitlement 

• Leave taken 

• Leave paid 

• Any carry‑over or adjustments 

This change will inevitably increase administrative pressure, particularly for payroll and HR teams, and may require updates to systems, record‑keeping procedures and internal controls. 

Get your records in order 

The new Fair Work Agency (FWA), established on 7 April 2026, is expected to play a central role in overseeing compliance with annual leave and related employment rights. 

Employers need to be assessing their annual leave and pay recording processes now to ensure that they are accurate, consistent and capable of retaining records for six years. 

If you need support or guidance to amend your payroll systems, please get in touch.