New duty to keep annual leave records

New duty to keep annual leave records

The Employment Rights Bill has been amended to include a new obligation on employers to keep records relating to annual leave. What does the Bill now say?

Bill progress. The Employment Rights Bill has completed its passage through the House of Commons and is now before the House of Lords. The Bill is expected to receive Royal Assent before parliament's summer recess in July 2025. However, the majority of the provisions in it are not expected to come into force until 2026 and may still require further regulations to flesh out the detail. In the final stages of the Bill's passage through the House of Commons, various changes and additions were made to it, including an important one relating to annual leave records.

New record-keeping obligation. The Working Time Regulations 1998 (WTR) require you to provide 5.6 weeks' paid annual leave to workers, but they say nothing about the keeping of annual leave records. That's going to change as the Bill will introduce a wholly new regulation into the WTR requiring you to:

(1) keep records which are 'adequate' to show whether you have complied with the statutory annual leave and pay entitlements for all your workers, including regular leavers and part-year workers (this includes records of pay in lieu of untaken annual leave on employment termination) and

(2) retain these records for six years from the date on which they were made.

Tip. You will be able to create, maintain and keep these records in such manner and format as you 'reasonably think fit', meaning there's to be no set format for them. Existing holiday record forms or holiday record forms should be adequate annual leave records for most workers (and it's best if you can also keep these electronically), but you will need to keep holiday pay records too.

Breach. The new Fair Work Agency, which is also being created by the Bill, will have the power to enforce your failure to keep adequate records of annual leave and holiday pay. Failure to comply will be a criminal offence, punishable with a (potentially unlimited) fine.

A new provision in the Bill will require you to keep records for six years to show you've complied with the paid annual leave entitlements in the Working Time Regulations 1998. Failure to comply will be punishable with a fine.

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