Post-Brexit changes in 2024 were intended to relax the record-keeping requirements for employers, but the obligations remain significant and are expected to become more demanding under the Employment Rights Bill.
‘Employers will face new record-keeping requirements in relation to holidays, and the Bill also creates a new enforcement agency, with enhanced enforcement powers,’ explains Claire Simon, solicitor in the employment team with QualitySolicitors Parkinson Wright.
To ensure records are accurate, employers first need to be confident that they are correctly categorising working time, as this is not always straightforward and can include time spent travelling or on call. Although the changes under the Employment Rights Bill are not expected until 2026, employers are likely to have a lot of big changes to grapple with and now is a good time to start getting ready.
Claire outlines the current record-keeping requirements and the expected changes to the Working Time Regulations (WTR).
What are the Working Time Regulations?
The regulations set a range of limits on working time and entitle workers to time off and holiday. They are intended to help protect health and safety at work.
What do we need to keep records of?
Employers need to keep records to show compliance with the following provisions of the regulations, where relevant to each member of staff:
- maximum average 48-hour working week;
- workers who have opted out of the maximum 48-hour week;
- maximum average 40-hour working week for workers aged under 18;
- maximum average 8-hours’ night working;
- maximum 8-hour limit on working at night where the work involves special hazards or heavy physical or mental strain;
- restrictions on night working during the restricted period for workers aged under 18, subject to limited exceptions and conditions; and
- offering free health assessments for night workers.
There is currently no requirement to keep records to show the correct amount of daily and weekly rest breaks and holiday taken.
How do we meet the record-keeping requirement?
Since January 2024, employers only need to keep records as they ‘reasonably think fit’ to show that they have complied with the requirements listed above. So long as they can show compliance, there is no obligation to keep records of the actual hours worked. For instance, it may be possible to extract information from other records, such as pay records to show compliance. We can advise you on the simplest way for your business to meet its record-keeping requirements. Records must be kept for two years.
What are the risks if we do not keep records?
It is an offence not to keep records and is punishable with an unlimited fine. Inadequate records can also leave your business vulnerable in the event of a dispute with a worker. This is not just important to avoid enforcement action under the regulations, but will also help deal with disputes over benefits and entitlements that can depend on the time worked, for example pay and holiday entitlement.
What changes should we expect and when?
The Employment Rights Bill will bring in a significant new requirement for employers to keep records of holiday and holiday pay.
The Bill will create a new enforcement body, called the ‘Fair Work Agency’. It will take on the role of existing enforcement agencies, as well as having new responsibilities and enhanced powers. Most significantly it will have a new responsibility to enforce paid holiday entitlement on behalf of workers and to issue penalty fines for the previous six years (although only from the date the Bill comes into force). Its new enforcement powers include requiring any individual to provide information or documents and the power to enter premises and to access IT systems.
Employers will need to keep adequate records to show compliance with:
- holiday and holiday pay, including for irregular hours and part-year workers;
- the requirement to make a payment for unused accrued holiday when a worker leaves, including any holiday carried forward from the previous holiday year (for example due to extended sickness absence); and
- the requirement to make a payment to irregular and part-year workers in lieu of holiday when they leave.
Records must be kept for six years. Employers risk an unlimited fine if they do not comply.
Although most employers record an employee’s annual leave, these changes are significant because it is not always easy to get calculations of holiday entitlement and holiday pay right. To give a couple of examples:
- freelancers may be treated as independent contractors who are not given any paid holiday but they may actually have legal status as a worker and be entitled to a backlog of holiday pay; or
- the correct calculation of a worker’s holiday pay may require working out an amount for certain additional payments, such as commission and overtime, that they would have earned if they had been in work.
How we can help
Although we do not have a date for these changes, they are expected in 2026 and we recommend getting prepared. Media coverage often increases workers’ awareness of their rights and can spark related claims. We can help you ensure your business is compliant with the Working Time Regulations.
For further information, please contact Claire Simon or a member of the employment team on 01905 721600 or via email worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.