Somewhere in your office there is a holiday spreadsheet. One tab a year, a row for each person, and a colour code only the office manager really understands. Requests arrive by text, or a word in the corridor on a Friday. It works, mostly. Danny gets his week in May, the cell goes amber, payroll pays him as usual, and nobody thinks about it again.
Since April, that spreadsheet — or whatever stands in for it — has been a legal record. Most firms haven’t noticed.
What changed in April
Paid holiday in this country comes from the Working Time Regulations, a 1998 law that gives every worker at least 5.6 weeks of paid leave a year. For nearly thirty years that law had an odd gap: you had to give the holiday and pay it correctly, but you didn’t have to keep any evidence that you had.
The Employment Rights Act 2025 — the big package of employment law passed last December, landing in stages between now and 2027 — closed the gap. Since 6 April 2026, every employer must keep records showing three things: each worker got the leave they were entitled to, they were paid the right amount for it, and anyone who left got paid for the holiday they hadn’t taken. The records must be kept for six years. Not keeping them is a criminal offence, punishable by a fine with no upper limit.
The day after, on 7 April, a new enforcement body opened its doors: the Fair Work Agency. It pulls into one place the minimum-wage inspectors who used to sit inside HMRC, the watchdog for employment agencies, and the licensing body for gangmasters. It can demand payroll records, recover what workers are owed, and add a penalty of up to 200 per cent of the underpayment on top — capped at £20,000 per person, halved if you pay within a fortnight.
Now the honest bit. The agency is not knocking on doors about holiday records yet. Its first year is minimum wage, agency rules and licensing. Holiday pay is on its list for later — 2027, on current indications. But when it starts, it can reach back: the law lets it pursue holiday underpayments going back to December 2025. So this is a runway, not a reprieve. The six-year record clock started in April whether anyone inspects you this year or not.
Why construction struggles with this specifically
A firm of accountants will pass this test without trying. Salaried staff, fixed hours, one payroll system that already stores everything. A mid-market construction firm is the opposite case, and it’s worth being precise about why.
Hours move. Site staff work Saturdays when the programme slips and short days when the weather is foul. That matters because holiday pay is not automatically the basic day rate: for people whose pay varies, the rules require it to reflect what they normally earn, including overtime that’s been paid regularly over the previous year. Working out the “right amount” means an average across months of hours. And where do those hours live? On a timesheet that is a photo on the site manager’s phone, in a WhatsApp thread that also holds the fuel receipts.
Casual and irregular labour has its own wrinkle. Since April 2024 it has been legal again to pay “rolled-up” holiday pay to irregular-hours workers — adding at least 12.07 per cent to each payslip instead of paying when the leave is taken. Perfectly lawful, and common on the ground. But it has to appear as a separate, visible line on the payslip. “It’s in the rate, everyone knows that” is exactly the arrangement you can no longer evidence.
Then there’s the spreadsheet itself. It’s a living document. Cells get overwritten, last year’s tab gets tidied up, and nobody can say what any of it looked like in March. “Kept for six years” doesn’t just mean the totals survive. It means being able to show, years later, that Danny asked, somebody approved, the days came off his allowance and the pay was worked out properly. A spreadsheet with no history can’t do that, however well it’s run.
One boundary worth drawing. Genuinely self-employed subcontractors — the ones paid under CIS, the construction tax scheme, pricing their own work and carrying their own risk — are not workers and get no statutory holiday. This law isn’t about them. But a labour-only subbie who works your hours, on your sites, week after week, may legally count as a worker whatever the paperwork calls him. If that description fits half your site labour, holiday records are the least of it, and it’s a conversation for your accountant before it’s one for me.
This is a capture problem, not an HR problem
The industry’s reflex answer will be an HR platform — nine modules, per-seat pricing, a portal nobody logs into. You don’t need it. What the law actually asks for is unglamorous: hours recorded once, at source, in a form that adds up; holiday requested and approved somewhere that keeps a timestamp; a pay calculation that can show its working; and nothing ever deleted, only superseded. That is a small, boring, purpose-built tool that fits how your firm already runs. The office manager keeps her colour code if she likes it. What changes is what sits underneath.
Where this doesn’t apply
If your office staff are salaried on fixed hours and your site labour is genuinely self-employed, you may need nothing new at all. Your payroll bureau, if you use one, is probably holding most of these records already. Ask them, in writing, whether they keep six years and whether holiday calculations are part of what they keep. If the answer is yes, file the reply and move on. Nobody should sell you software to fix a problem a phone call closes.
The firms that should take this seriously are the ones with weekly-paid trades, moving hours, rolled-up rates and one overworked spreadsheet. In the audits I run, that’s most of them. If you’re not sure which kind you are, that’s usually the answer. Get in touch.