Holiday Pay Record Keeping Changes from April 2026:

There has been some discussion recently about a change coming into effect from April 2026 around holiday pay and leave record keeping. The messaging circulating online suggests a “stealth” change with significant risk for employers.

The reality is slightly different. The requirement itself is not entirely new, but expectations around how clearly and consistently records are maintained are tightening.

With the new Fair Work Agency expected to begin enforcement activity from April 2026, this is an area employers should take seriously now.

What is changing

From April 2026, employers are expected to maintain adequate records of:

• Annual leave taken (both statutory and additional)
• Any leave carried forward
• How holiday pay has been calculated
• What has been included or excluded in that calculation
• Payments made in lieu of untaken holiday 

These records must be retained for 6 years. For many employers, parts of this are already in place. The difference is the standard of evidence expected if challenged.

Why this matters more now

On the surface, this may look like an administrative change. In practice, it goes further than that.

Holiday pay is one of the most commonly misunderstood areas of payroll, particularly where:

• Employees work irregular hours
• Overtime and commission are involved
• Part-time arrangements vary week to week

If records do not clearly show how holiday pay has been calculated, it becomes difficult to demonstrate compliance. This is particularly important in two scenarios:

1. Enforcement risk

With the Fair Work Agency coming into effect, there is expected to be greater scrutiny on employment practices, including record keeping.

2. Business sales and due diligence

If a business is being sold, buyers will typically review payroll and employment records closely. Gaps in holiday pay calculations or leave tracking can raise concerns and delay or impact transactions.

Where most employers fall short

Most payroll and HR systems do record leave. The issue is not whether records exist. The issue is whether they are complete, consistent and explainable.

Common gaps include:

• No clear breakdown of how holiday pay is calculated
• Missing records for variable pay elements
• Inconsistent tracking of carried forward leave
• Lack of audit trail if queried later

These gaps often only become visible when someone asks the question.

What employers should do now

This does not require immediate restructuring, but it does require a review.

A sensible starting point would be:

• Review how annual leave is currently tracked
• Check how holiday pay is calculated, especially for variable pay
• Ensure records clearly show what is included in calculations
• Confirm that records are retained and accessible for up to 6 years
• Identify any areas where the process relies on manual or inconsistent input

The goal is simple:
If asked, could you clearly explain and evidence how holiday pay has been calculated for any employee?

A practical point to keep in mind

This is not about creating more administration for the sake of it. It is about making sure that the records you already keep are robust enough to stand up to scrutiny, whether that comes from enforcement bodies or during a business transaction. For many employers, small adjustments now will prevent larger issues later.

Final thoughts

There has been a lot of noise around this change, but the underlying message is straightforward.

Holiday pay has always required careful handling. The expectation now is that the evidence behind it is just as clear as the calculation itself.

Taking the time to review this now will put you in a stronger position well ahead of April 2026.