Holiday pay records: is payroll being told when staff take leave?

From 6 April 2026, employers must keep records demonstrating that they have complied with statutory annual leave and holiday pay requirements for at least six years.

For GP practices, this may sound like a relatively minor administrative change. In reality, it is worth taking seriously.

Most practices already record annual leave. Staff submit leave requests, managers approve them, balances are maintained and payroll continues to run.

But the new requirement goes further than simply being able to show that somebody booked a week off. Practices need to be able to demonstrate that workers received the holiday to which they were entitled and that the holiday was paid correctly.

That means bringing together information that may currently sit across several different systems: HR software, payroll, rotas, timesheets, spreadsheets and employee records.

Recording leave is not the same as recording holiday pay

Recording that someone took 20 days' leave is only part of the evidence. Employers now need records covering matters such as:

• Holiday taken
• Holiday carried over from previous years
• Holiday pay
• Any payments in lieu of holiday, for example pay for unused holiday when someone leaves a job
• Details of relevant payments included when holiday pay was calculated

The question Practice Managers should ask

Rather than asking: "Do we record annual leave?"

Ask: "When someone takes annual leave, does payroll know which dates were holiday and have enough information to determine whether a holiday pay adjustment is required?"

This is particularly important for employees who regularly work additional hours, overtime or receive other variable payments.

If payroll is never told that annual leave has been taken, there may be no trigger to review the employee's holiday pay. The practice may therefore have a good record of holiday entitlement, but not necessarily the evidence needed to demonstrate holiday pay compliance.

The legal requirement is not that payroll must always be notified manually. What matters is that the practice has a reliable process for ensuring that payroll has the information it needs to apply the correct holiday-pay rules.

A simple process can close the gap

Practices do not necessarily need another system. They need a clear link between annual leave records, payroll, the holiday pay calculation and the evidence retained afterwards.

For staff whose pay never varies, the evidence may be straightforward.

For anyone receiving regular overtime or other variable payments, the practice needs to ensure that payroll has sufficient information to apply the appropriate statutory holiday-pay rules.

Certain regular payments may need to be reflected in at least part of a worker's statutory holiday pay, depending on the individual's working arrangements and the applicable rules.

The resulting records must be retained for at least six years from the date they were made.

A simple monthly reconciliation between annual leave records and payroll information can help close this gap and support the audit trail the practice needs.

Fair Work Agency enforcement

The Fair Work Agency launched on 7 April 2026 and already has powers to investigate and enforce a number of workplace rights. Workers can also use current government complaint routes to raise certain pay and work-rights concerns about an employer.

However, statutory holiday pay enforcement has not yet transferred to the Fair Work Agency. Government guidance states that the FWA is expected to take on enforcement of statutory holiday pay during 2027, with this not beginning before April 2027.

The new record-keeping duty itself is already in force. Failure to comply with the statutory duty to keep adequate annual leave records is an offence under the Working Time Regulations, as amended.

This does not need to be a source of concern where appropriate records and payroll processes are already in place, but it is a sensible prompt for practices to review their arrangements now rather than later.

This article provides general information and is not a substitute for individual employment-law or payroll advice.

Sources

ACAS (2026) Keeping records: Holiday entitlement. Last updated 3 June 2026.

ACAS (2026) Irregular hours and part-year workers. Last updated 22 April 2026.

Department for Business and Trade (2024) Holiday pay and entitlement reforms from 1 January 2024. GOV.UK. Updated 1 April 2024.

Fair Work Agency (2026) Contact the Fair Work Agency. GOV.UK.

Fair Work Agency (2026) Fair Work Agency: guidance for employers. Business.gov.uk.

GOV.UK (2026) Holiday entitlement.

GOV.UK (2026) Calculating holiday pay for workers without fixed hours or pay.

Great Britain (1998) Working Time Regulations 1998, SI 1998/1833. London: The Stationery Office.

Great Britain (2025) Employment Rights Act 2025, c.36, s.35, ‘Duty to keep records relating to annual leave’.