Employment Rights Act 2025: New record keeping obligation coming into force

The Employment Rights Act 2025 (“ERA 2025”) introduces important new obligations for employers in relation to annual leave records.  Below we set out what employers need to know and what actions your organisation should be taking now in readiness for the change.

A new enforcement body

The ERA 2025 creates the Fair Work Agency (“FWA”), a new body bringing together existing enforcement functions relating to national minimum wage, licencing, labour exploitation and modern slavery.  In due course, the FWA will also take on the enforcement of statutory sick pay and holiday pay. The FWA will be established on 7 April 2026 and will be responsible for existing enforcement functions, however it is yet to be confirmed when it will become fully operational.

New record-keeping duty

One of the most significant changes is a new legal duty requiring employers to keep adequate records demonstrating compliance with annual leave rules. This includes records covering:

• Workers' entitlement to annual leave (including additional leave).
• Annual leave entitlements for irregular hours and part-year workers.
• Holiday pay entitlements.
• Any payments in lieu of untaken holiday on termination, including any leave carried forward from a previous year.

Employers have flexibility in how they create and maintain these records, but all records must be kept for six years from the date they were made. Failure to comply is a criminal offence, punishable by a fine.

When does this apply?

The record-keeping duty comes into force on 6 April 2026. However, the FWA's power to enforce breaches won’t be immediate, presumably to allow for employers to collate their records in accordance with the duty.  The date on which enforcement of the record-keeping duty will become operational is still yet to be confirmed.

What should employers do now?

Employers should review current record keeping practices in relation to annual leave and pay for annual leave to assess if compliance with the new record-keeping duty can be demonstrated. If gaps exist, put a plan in place to address them ahead of 6 April 2026.

We will continue to provide further updates on what's changing, when it takes effect, and the practical steps you can take now to prepare your organisation. In the meantime, you can access our Employment Rights Act hub to keep updated.