A leave balance is not enough if it cannot show how entitlement and pay were calculated. Since 6 April 2026, employers must keep detailed annual-leave and holiday-pay records for at least six years from the date each record was made. The evidence should explain what the worker accrued, took, carried over and was paid.
The six-year record duty is already in force
GOV.UK states that employers must keep detailed annual-leave and holiday-pay records from 6 April 2026 for a minimum of six years. Employers can use payroll, an HR system, spreadsheets or another secure method, but may face a fine if they cannot demonstrate that records are kept.
This is a current requirement, not a proposal. It sits alongside duties to provide paid leave, calculate pay correctly, allow workers to take leave and preserve entitlement where carry-over rules apply. Payslips may show payment without explaining entitlement, leave taken, carry-over or the calculation.
What a useful holiday record should contain
Start with the worker's name, status, working pattern, start date, leave year and contractual entitlement. Record whether hours are regular, wholly or mostly variable, or part-year because the rules may differ.
For each leave year, retain the opening entitlement, leave accrued, dates requested and taken, refusals or changes, carry-over and closing balance. Link the pay calculation: relevant earnings, reference period, rate, adjustments and amount paid. Ensure approvals made outside the main system reach payroll or HR.
Explain unusual cases such as sickness, statutory leave, termination or a mid-year hours change. Keep communications showing why leave was carried over or how the worker was encouraged to use it.
Reconcile the rota, leave system and payroll
Holiday errors arise when three systems tell different stories: the rota shows days not worked, the leave system shows a deduction and payroll lacks the full earnings history. Give one person responsibility for reconciling them before pay is finalised.
Test a sample each pay period. Trace the request through approval, entitlement deduction and payment, and explain carry-over. If payroll is outsourced, define which records the provider holds and which the employer retains. Outsourcing does not remove the need for accessible evidence.
Record why the holiday-pay rate is correct
For regular-hours workers, at least four statutory weeks must be paid at the normal rate and the remaining 1.6 weeks may be paid at the basic rate. Normal pay can include commission, regular overtime and certain other payments. Record which elements were included and why.
Where pay or hours vary, GOV.UK uses a 52-week paid reference period. Unpaid weeks are generally skipped, looking back up to 104 weeks. If fewer than 52 paid weeks exist, use the available full paid weeks. Retain the figures, not only the final average.
Test whether your records can explain the payment.
HR + SAFETY can sample regular, variable-hours and part-year records, identify gaps between HR and payroll, and set out the corrections and controls required.
Discuss a holiday-pay records reviewDo not confuse 12.07% leave accrual with 12.07% rolled-up pay
For leave years beginning on or after 1 April 2024, irregular-hours and part-year workers normally accrue statutory leave at 12.07% of hours worked in each pay period. If the contract gives more than the statutory 5.6 weeks, adjust the percentage.
That is an entitlement calculation based on hours. Rolled-up holiday pay is a separate, optional payment method based on pay. Using the same percentage does not make the two entries interchangeable. Keep one record showing hours and leave accrued, and another showing the holiday-pay amount paid.
Not every variable rota creates irregular-hours status: hours must be wholly or mostly variable under the contract. A repeating pattern with fixed hours may not qualify. A part-year worker has a year-round contract but periods of at least a week when they are neither required to work nor paid.
Rolled-up holiday pay is limited and must be visible
Rolled-up holiday pay is available only for irregular-hours and part-year workers. It must be at least 12.07% of total pay in the pay period, paid with normal pay and shown separately on the payslip. It cannot be hidden in an unexplained hourly rate.
Rolled-up pay does not cancel the right to time off. The employer must still allow and encourage the worker to take holiday. It may also involve a contractual change, so communicate the proposal and follow a proper process before introducing it.
Special calculations apply during sickness or statutory leave. A worker already receiving rolled-up holiday pay must continue receiving holiday pay based on the relevant preceding average. Record the absence and calculation basis.
Acas: rolled-up holiday pay ↗ · Legislation.gov.uk: Working Time Regulations, regulation 16A ↗
Carry-over needs evidence, not an unexplained balance
Holiday may carry over because of sickness, statutory leave or the employer's failure to let or encourage the worker to take it. The rules and limits depend on the circumstances. The record should identify the amount, reason, date it arose, any deadline for using it and the communications sent to the worker.
If statutory leave may lapse, retain evidence that the worker could take it, was encouraged and was warned clearly. A year-end email after rotas are full is weak evidence if leave could not realistically be booked.
Eight checks for your holiday-pay records
Run the checklist across regular-hours, variable-pay, casual, bank, seasonal and part-year workers. The edge cases are where an otherwise tidy system is most likely to apply the wrong rule.
- Confirm every worker's leave year, entitlement and working-pattern classification.
- Record leave accrued, requested, approved, taken, refused and cancelled.
- Keep the earnings and reference-period data behind each pay calculation.
- Separate leave accrual from rolled-up holiday-pay entries.
- Show rolled-up holiday pay separately on eligible workers' payslips.
- Record sickness, statutory leave, carry-over reasons and expiry dates.
- Reconcile managers' approvals, rota data, HR records and payroll outputs.
- Retain each annual-leave and holiday-pay record securely for at least six years.
Keep enough evidence to reconstruct each worker's entitlement, leave history and holiday-pay calculation. Separate hours-based accrual from pay-based rolled-up holiday pay, document carry-over and keep every record for at least six years from the date it was made.
This guide provides general information for UK employers. It is not legal advice and should not replace advice based on the facts of a specific matter.