A Leaving Employee Exposes A Mess

Kate 0:38

Picture this. Someone in your team is leaving. She's been with you four years. Lovely employee, good worker, no drama. In her last week, she sends you a polite email. She has, by her count, eleven days of holiday left to take. You think, surely not. She had two weeks in July, she had Christmas, she had that long weekend in March. You go to your holiday tracker. Your holiday tracker is a spreadsheet on Sharon's old computer. Sharon left in 2024. You go to her email folder, you search holiday. You find 73 emails. None of them quite tell you what you need. You go to WhatsApp. You find the messages where you said yes, fine, to her booking the long weekend in March, but you can't quite tell if she ever actually booked it as holiday or just took the days. You go to the manager who replaced Sharon. He shrugs. You go back to the email. You stare at it. She has by her count 11 days of holiday left. You have, by your count, no idea. Now, the bit that's changed. From 6th April 2026, you are legally required to keep annual leave records for every worker for six years. Not a sensible idea, not best practice. Required. If the Fair Work Agency knocks tomorrow, you have to produce a clear, dated, accurate record of every hour and every day of holiday taken by every worker going back six years. Most small businesses can't. Most small businesses don't even know they're meant to. This episode is about getting tidy without a new system. Because you don't need new software. You need clear records in one place. That can survive an inspection. The Welcome to the Hive. Hey there, welcome back to Buzzing About HR, the podcast for small business owners and HR professionals who want straight talking, plain English advice. I am Kate, your host, HR Queen Bee, and someone who once spent an entire Saturday afternoon piecing together two years of someone's holiday from old emails and one accidentally

The 2026 Legal Duty Explained

Kate 2:58

deleted WhatsApp thread. Never again. With me as ever, taking annual leave 365 days a year, is Hazel, our well-being officer. Her record keeping is impeccable. She remembers exactly when she had biscuits last and exactly how many. The gaps in her diary are as suspicious as her gaps in obedience. This episode is about holiday leave records. The blog post, linked in the show notes, covers how to calculate annual leave for part-time employees with the maths and the formulas. This podcast covers the bit the blog doesn't, the new record keeping duty, what an inspection could look like, and how to get tidy without buying a single piece of software. Kettle on. Let's go. The Buzz. What's changed and why? Quick context: holiday law in the UK has been quietly tightening for years. The 2024 reforms updated the calculation methods for irregular hours and part-year workers, that 52-week reference period, ignoring weeks of zero pay. The 2025 Employment Rights Act took it further. From 6th April 2026, three things changed. One, record keeping became an explicit statutory duty. You must keep records of every worker's holiday entitlement, taken, accrued, and paid for six years. Two, the records must be accessible, not somewhere on a hard drive. Accessible, meaning if asked, you can produce them. 3. The Fair Work Agency, which we covered in detail in episode 19, can now request these records as part of its enforcement work. That last bit is the punch. Holiday records used to be the kind of thing nobody really looked at unless someone made a complaint. Now they can be looked at proactively by an enforcement body with no notice. If your records are not in shape, you do not have a quiet conversation. You potentially have a notice of underpayment. And the maths gets ugly fast. If you've underpaid holiday pay by £200 per worker per year for five workers across six years, that's £6,000 owed in arrears, plus a penalty of up to 200% on top. That's £18,000 for what feels like a small admin slip. This is why we're doing this episode. The hive check, the numbers, some quick

Why Errors Turn Into Big Money

Kate 5:33

numbers. The CIPD's 2025 SME study found that 68% of small businesses keep holiday records in spreadsheets that are not centrally backed up. 29% have no consistent format across the business. 15%, and this is wild, have no formal record at all and just keep it in their head. For employees, the average employee in a small business takes 23 days of holiday a year out of an entitlement of 28. The lost five days a year add up. Over six years, that's 30 days per worker. If those workers leave and claim payment in lieu and they're entitled to it for the current year, you owe. Holiday is not soft money. Holiday is real money on a pay slip. The sting, where small businesses trip up. The five things that catch small businesses out on holiday records. One, multiple sources of truth. The owner has a spreadsheet. The manager has a different one. The bookkeeper has a third. WhatsApp has the messy version. Nobody's matches anyone else's.

Five Ways Holiday Records Go Wrong

Kate 7:14

3. Bank holidays. Some businesses include them in the 28-day entitlement, some don't. Some say we're closed bank holidays, so they don't count. Some give them as extras. This is fine as long as it's clear, written down, and consistent. The ones that get caught out are the ones where the policy is different in different parts of the business, or different now to what it was three years ago, with no record of when it changed. 4. Carry over. Did Sarah carry over five days from last year? Did anyone agree she could? Where is that decision recorded? If you can't answer, you can't defend a claim. 5. Payment in lieu on leaving. When someone leaves, you must pay them for any unused statutory leave for the current year. If your records say they had 11 days left and they say they had 13, you'd better have evidence. The records are the evidence. The waggle dance, the tidy up in three weeks. You don't need software. You don't need to overhaul anything. Three weeks, three actions, week one, one place. Pick one home for holiday records. Could be a single shared spreadsheet, a section of your existing HR system, a single folder in your accounting software. Doesn't matter which. The rule, there is one place, not three. Not mostly here, sometimes there. One. Decommission the others, move data across, communicate to managers. From this date, all holiday goes through this one place. Week two, the data fill. For every current employee, populate the file with their entitlement for this year, in days or hours, whichever is more accurate for them. Their entitlement for the previous five years. Their actual holiday taken year by year with dates. Any carryover agreed. Their current balance. This is the painful bit. Allow yourself a focused half day.

Three Weeks To Get Tidy

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Don't try to do it five minutes at a time. For irregular hours and part-time staff, use the proper calculation method. The blog post covers the maths. Week three, the future proof. Decide three things in writing signed off by you. One, how holiday is requested, email, form, system. Two, how it's approved, one person, manager plus you, auto. Three, how it's recorded. Who updates the file? When? How is it visible to the employee? Write all three on a single page. Email it to the team. From now on, this is how holiday works. You will be amazed how much smoother the next 12 months are once you have done this. The Swarm, Mythbuster Parade. Myth one. My accountant's payroll software handles all this. Maybe partly. Probably not all of it. Payroll software typically tracks holiday pay, not entitlement, not balance, not requests. Find out specifically what your software does and does not record. Then fill the gaps. Myth two, I trust my team to track their own. You can trust them, you should still keep your own records. When the Fair Work Agency asks, I trust them is not an answer. Myth three, six years of records is impossible to produce now. Probably true for the previous six years. The law requires you to keep records from April 6, 2026 forward. So the six-year clock now starts ticking. If you don't have great records for 2022, you can't manufacture them. But you can be perfect from this point on. Start now. Myth four. Small businesses don't get inspected. Tell that to the 5,000 plus businesses that received civil penalties last year. Small does not mean invisible. The honeycomb, your quick action list. Seven actions. One, pick one home for holiday records this week. 2. List every employee with their start date, hours, and current entitlement. 3. For each employee, populate their year-to-date holiday taken. 4. Sense check at least three calculations against the proper formula. If you have part-time or irregular hours staff, this is critical. 5. Write a one-page holiday policy. Request, approve, record.

Mythbusting Payroll And Self Tracking

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One page. 6. Share the file with the team so they can see their own balance. 7. Diary. A quarterly review. Not annual. Quarterly. Catch problems before they become claims. Flying the hive. Right before I go. Holiday records are the dullest possible topic for a podcast. I am aware of this. But this is the kind of thing that bites quietly. It doesn't blow up in a dramatic moment. It accumulates. A miscalculation here. A missed day there. A spreadsheet that quietly drifts out of sync. And then someone leaves and they ask. And the answer doesn't add up. And you discover the answer hasn't added up for three years, and now five other people might also have wrong balances. And now the Fair Work Agency wants a chat. This is preventable. This is fixable in three weeks. So do the boring thing this month, do the tidy. Do the one place, do the catch-up. The version of you in October who has tidy holiday records will write you a thank you note. If this episode was useful, share it with another small business owner who keeps her holiday records in three different files. Find me at kateunderwoodhr.co.uk or email buzz at kateunderwoodhr.co.uk. Subscribe so you never miss an episode. And if you haven't left a review yet, it takes 30 seconds. It genuinely helps and it is easily the

The Seven Step Action List

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cheapest good deed you'll do all week. More satisfying than a biscuit with your tea. Not quite as good as cake, but nearly. Until next time, keep buzzing and take care of your people. Kettle on, standards up.