30 March 2026
The government has introduced regulations implementing several provisions of the Employment Rights Act (ERA) 2025, due to come into force on 6 April 2026.
One of the most notable changes is the new legal requirement for employers to maintain adequate records of annual leave and pay for a minimum of six years.
Regulation 3(8) of the commencement regulations activates Section 35 of the ERA 2025, which places a clear duty on employers to keep records relation to employees annual leave. The regulations confirm:
“The records referred to in paragraph (1)(a) may be created, maintained and kept in such a manner and format as the employer reasonably thinks fit.”
This gives employers flexibility in how they store the information (digitally or on paper) but the records must be complete, accurate and retained for at least six years.
This will undoubtedly put further administrative pressure on employers and pay professionals. Whilst you may already have some methods in place to record annual leave, these processes should be reviewed to ensure that all annual leave and pay is clearly recorded.
Interestingly, this amendment has not been publicly highlighted by the government. It does not appear in the Department for Business and Trade’s implementation timeline of Plan to Make Work Pay and the Employment Rights Act. As a result, many employers may be unaware of the upcoming obligation.
The Fair Work Agency (FWA), scheduled to be established on 7 April 2026 as part of the ERA 2025 reforms, is expected to play a central role in overseeing compliance with annual leave. However, it was confirmed in the previously published factsheet that timescales for implementation would be announced in due course. Employers should be mindful that it is unknown how quickly the FWA’s enforcement activities will be applied, so looking at your annual leave and pay processes now will be invaluable in staying compliant and mitigate any enforcement actions by the FWA.
The CIPP Policy Team will of course be keeping an eye on further developments and sharing this with our members and the wider pay communication as soon as we can.
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