Page 60 • The HERALD • 12th March 2026 v SUPPORT YOUR LOCAL SPECIALISTS v ASK A PROFESSIONAL From 6th April, dubbed Records-Day (R-Day), businesses must centrally retain accurate records of holiday entitlement, holiday pay calculations and annual leave processed through payroll for six years. Robust systems must be implemented so that records are securely stored and easily accessible to authorised sta , whether digitally or physically. “Many businesses won’t see this coming – it’s a bolt out of the blue,” said Julie Gunnell, Associate Director of Payroll Growth at Azets, a UK top 10 accountancy and business advisory rm which has Hampshire o ces in Chandler’s Ford, Portsmouth and Havant. “R-Day is a wake-up call. Employers need clear protocols for record access and ownership. If the Fair Work Agency (FWA) comes knocking and records are fragmented across HR and payroll, it becomes an admin emergency.” Julie added: “This legislation is a game-changer – it ensures HR and payroll teams work collaboratively, rather than maintaining separate records, to create a single source of truth. Without this alignment, businesses risk compliance failures and potential criminal prosecution for worker exploitation.” e FWA launches in April with enforcement powers to inspect premises, demand records, and impose unlimited nes or criminal sanctions for noncompliance. Government research highlights the scale of the issue: 900,000 UK workers annually have holiday pay withheld, worth £2.1 billion, and nearly 20% Businesses With Payroll Should Prepare For ‘R-Day’ On 6th April Advice from Azets of minimum wage workers are underpaid. With enforcement powers, the FWA can inspect business premises, demand production of records and impose criminal sanctions and unlimited nes for noncompliance. Julie said: “The legal risk is clear – failure to maintain records may now constitute a criminal offence, not just a civil violation.” H-J Dobbie, Azets’ Head of HR Consultancy, said: “Records must show the amount of leave taken and how holiday pay was calculated, especially including variable pay components like overtime and commission and holiday paid in lieu upon termination of employment. “HR and payroll will need to work together to ensure adequate records are maintained and not assume that one or either is doing so - HR typically manage holiday entitlement, while payroll will manage the pay element. “Employers must have defensible, documented evidence of holiday pay compliance - even after employees leave - to withstand FWA or employment tribunal scrutiny.” According to latest annual business activity gures from the O ce for National Statistics, as of March 2025, there were 2.73 million VAT and/or PAYE businesses in the UK, with 405,000 (14.8%) in the South East. Azets’ recommended actions for employers: Audit existing records – ensure holiday entitlement and pay records comprehensively track leave taken, pay calculations and all variable pay elements. Implement or update systems – use electronic systems to securely store these records for six years, whether created before or a er 6th April 2026. Train HR and payroll teams – clarify what’s adequate; they need to know the FWA may request leave logs, pay slips with holiday pay breakdowns and the basis for variable pay calculations. Review compliance policies – update internal recordretention policies to re ect the six-year statutory requirement and establish record destruction schedules therea er. Julie Gunnell, Associate Director of Payroll Growth at Azets, left, and H-J Dobbie, Azets’ Head of HR Consultancy, are warning that businesses must keep accurate records of holiday entitlement, holiday pay calculations and annual leave processed through payroll for six years from April
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