For many SMEs, employee record keeping has traditionally been seen as an administrative task. However, changes introduced in April 2026 mean this is no longer just best practice, it is now a clear legal requirement.
While employers have always been required to keep certain records, recent changes and increased enforcement mean there is now greater emphasis on maintaining accurate records of holiday entitlement and holiday pay. Employers must be able to demonstrate compliance if challenged.
For SMEs, this represents a significant shift.
Employers must now be able to clearly evidence:
These records must be accurate, accessible and consistent.
They may be required in the event of:
From 6 April 2026, a new legal duty requires employers to keep adequate records of holiday entitlement and holiday pay.
This is important because:
In practice, many employers retain payroll and holiday records for up to six years to ensure they can respond to any potential claims or disputes.
As highlighted in ACAS guidance on keeping records of holiday entitlement, maintaining accurate and consistent records is essential to meeting legal obligations and avoiding disputes.
For many SMEs, record keeping is managed across spreadsheets, emails or by individual managers.
This can lead to:
With the introduction of clearer legal requirements, these informal approaches now present a higher level of risk.
Employee record keeping sits at the point where HR and payroll meet.
Accurate payroll depends on:
If these areas are not aligned, businesses may face:
For SMEs, this is not about adding complexity. It is about putting the right structure in place.
This includes:
Using a structured system can make this significantly easier.
At Craven Consultancy Services, our HR software supports SMEs in managing employee records, tracking holiday and absence, and maintaining clear and compliant documentation. This helps ensure your processes are accurate, consistent and aligned with legal requirements.
Yes. From April 2026, employers are legally required to keep adequate records of holiday entitlement and holiday pay.
In most cases, records should be kept for up to six years to demonstrate compliance if required.
Failure to keep accurate records can lead to compliance issues, difficulty defending claims and potential financial penalties.
For more information on keeping accurate holiday records, visit ACAS:
https://www.acas.org.uk/checking-holiday-entitlement/keeping-records
Employee record keeping is no longer just an administrative task. It is a legal requirement and a key part of managing risk.
For SMEs, putting the right structure in place will not only support compliance but also improve accuracy, reduce issues and provide confidence in day to day operations.
If you require support with your health and safety, please get in touch with our team, 01756 860 600.
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