White paper
HR and PayrollSix challenges, and how Fusion Practices solves them
A summary of what we talked through at our Oracle user group session, from the holiday pay record-keeping duty that came into force on 6 April 2026 to the payroll policy decisions no system makes for you.
For local authorities, universities, research institutes and charities running Oracle Cloud HR and Payroll, or about to.
Holiday pay, and the new duty to prove it
Standard absences and the SOAK programme
The payroll parallel run
The payroll policy decisions you have to make
What we covered in our session
Thank you to everyone who joined our Oracle user group session. These sessions bring our customers together in one place so we can talk to each other, share what we are working on, and help each other get more out of the systems we all run.
We had people join from local authorities, universities, research institutes and the charity sector, and the discussion was as interactive as we hoped. HR and Payroll was the topic, and here is a summary of what we talked about and what Fusion Practices is doing about each of the problems raised.
Who was in the room
- Local authorities
- Universities
- Research institutes
- Charity sector
Executive summary
The strongest problems our customers raised, what Fusion Practices does about each one, and what the organisation gets out of it.
| Business problem | How Fusion Practices solves it | Business outcome |
|---|---|---|
| Holiday pay has to be based on average earnings over the previous 52 paid weeks, and since 6 April 2026 that calculation has to be evidenced and kept for six years | Two tested ways of running the average earnings calculation, one through absence recording and one through overtime, each leaving the calculation recorded in the system | Leave paid on what people actually earn, with records that stand up to inspection |
| Organisations that went live earlier never captured the historic weekly earnings the calculation needs | We identify the affected employees and migrate their historic values so the calculation has something to read | The calculation is correct from day one and the compliance work does not stall |
| Every statutory change means another round of configuration work for an already stretched team | We move you onto standard absence handling, which is the fully supported route | Statutory change arrives ready to use, with no configuration effort |
| Quarterly update problems are only discovered once they are already affecting live pay | Our SOAK programme puts each quarterly update into one of your environments six weeks early | Problems found and fixed before they reach live payroll |
| A 5 per cent parallel run variance in a 10,000 person payroll is 500 employees who may be paid wrong | We set tolerances by what the difference means to the employee, track who is still unreconciled by name, and agree a mitigation plan before go-live | Nobody enters go-live with an unexplained pay difference, and month one is calmer |
| Starter, leaver and salary visibility rules are policy decisions that get left to chance | We put the decisions in front of you as decisions, then configure the system to match what you choose | Policy decided deliberately, not discovered in month one |
These problems are common across local authorities, universities, research institutes, the charity sector and any organisation running Oracle Cloud HR and Payroll.
What the law has required since 6 April 2026
The points below are legislative requirements, not recommendations from Fusion Practices. They come from section 35 of the Employment Rights Act 2025, which inserted a new record-keeping duty into the Working Time Regulations 1998 and took effect on 6 April 2026. They apply to every UK employer, whatever payroll system it runs.
Keep adequate records showing you have complied
- Employers must keep adequate records demonstrating that workers received the correct amount of annual leave, currently a minimum of 5.6 weeks a year.
- Until this duty came in, most employers in Great Britain had no legal obligation to keep holiday records at all.
Show that leave was paid correctly, and how the figure was reached
- The records have to evidence the calculation of holiday pay, not just the amount that was paid.
- That means showing which pay elements were included and which were left out, such as salary, overtime, commission, bonuses and allowances.
Cover carry-forward and payment in lieu on termination
- Records must cover payment for unused statutory leave when a contract ends.
- That includes any leave the worker was legally entitled to carry forward from the previous holiday year.
Retain everything for six years
- Records must be kept for six years, bringing holiday documentation into line with the retention already required for the national minimum wage.
- The Act allows records to be created and kept in whatever manner and format the employer reasonably thinks fit. No guidance has been issued on what counts as adequate, so the judgement sits with the employer.
Failing to keep the records is a criminal offence, and enforcement has moved
- Failure to keep adequate records dating back to 6 April 2026 is a criminal offence in itself, punishable by an unlimited fine.
- Enforcement sits with the Fair Work Agency, which launched on 7 April 2026 and takes over responsibilities previously held by HMRC and other bodies. It can inspect premises, interview workers, require records to be produced, and bring tribunal claims on behalf of workers.
- The agency is starting with other areas and will move on to holiday entitlement in time, but it has retrospective powers over holiday pay underpayments going back to December 2025.
- Where records show holiday pay was underpaid, the agency can demand the underpayment and add a penalty of 200 per cent of it, capped at 20,000 pounds per underpaid individual, halved to 100 per cent if paid within 14 days.
Sources: Employment Rights Act 2025, section 35, amending the Working Time Regulations 1998. Commencement regulations published 16 March 2026. Summarised in published analysis from Lewis Silkin, DLA Piper, Baker McKenzie and Azets, March and April 2026. Checked July 2026. Verify against current guidance before publication.
Six challenges raised during the session
What our customers are dealing with, and what we are doing about each one.
Holiday pay must be based on average earnings over the previous 52 paid weeks, looking back as far as 104 weeks to find them, and since 6 April 2026 the calculation has to be evidenced for six years.
Two tested approaches, one through absence and one through overtime, both running the look-back and leaving an auditable record behind them.
Organisations that went live early never captured the weekly earnings history the calculation needs.
We find the affected employees and migrate their historic values, so the calculation is right from day one.
Custom absence plans mean configuration work for every statutory change.
We move you onto standard absences, so statutory change arrives ready to use.
Quarterly update problems are only found once they are already affecting live pay.
Our SOAK programme gives you the quarterly update six weeks early in one of your environments.
A 5 per cent parallel run variance in a 10,000 person payroll is 500 people who may be paid wrong.
We set tolerances by employee impact, track who is still unreconciled by name, and agree a mitigation plan before go-live.
Starter, leaver and salary visibility rules are policy decisions, not system settings.
We put the decisions in front of you, then configure to match your policy and your sector.
Are you paying holiday pay on average earnings, and can you prove it?
From the sessionThe new legislative requirement, and what we have built to meet it.
The challenge
- Holiday pay has to be based on normal earnings, not on the basic salary held in the system. The average is taken over the previous 52 paid weeks, and any week where the worker was paid nothing is skipped, so the calculation can need to look back as far as 104 weeks to find 52 paid weeks to average. That has been the law since April 2020.
- What changed on 6 April 2026 is that you now have to prove it. Employers must keep adequate records of holiday entitlement, leave taken and how holiday pay was calculated, and keep them for six years.
- Why this matters in practice: most organisations today pay holiday at the basic salary held in the system. If your people work regular overtime, or earn enhancements for unsocial hours, their normal earnings are higher than that basic figure. Every week of leave they take, their pay drops.
- The legislation treats that as unfair. If someone regularly earns those extra hours, an average of that earning should follow them into their leave.
How Fusion Practices solves it
- We have built two ways of doing this. Both are in user testing now, with the first go-lives planned for later this year.
- The first works through absence. The employee records the absence, it goes for approval, and once approved the system looks back 104 weeks, works out the average earnings and pays the holiday at that rate.
- The second works through overtime. The employee books an overtime element, the line manager approves it, and the same look-back calculation runs from there.
- Which one suits you depends on how your people record their time and how your enhancements are paid. Working that out with you is one of the first things we do.
The benefit
- Leave is paid on what people actually earn, not on the basic salary stored in the system.
- You meet the requirement, including keeping the records for six years.
- If you run 24/7 services this affects you now. If your people do not work regular overtime, the impact is smaller.
Making the calculation work if you went live early
From the sessionThe hardest part of the holiday pay work is historic data.
The challenge
- The average earnings calculation needs weekly earnings history to read. That history only started being captured a year or two ago, so organisations that went live before that never collected it.
- For those earlier periods the calculation has nothing to work from, so the average comes out wrong for anyone employed before that point.
- Being an early adopter should not turn into a compliance problem, and no payroll team should be rebuilding two years of earnings history manually.
How Fusion Practices solves it
- We wrote a script that finds the affected employees and migrates their accumulated historic values into the right place.
- The calculation then works from day one, rather than only for pay periods after the history started being captured.
- The compliance work carries on rather than stalling while somebody tries to reconstruct the missing years.
The benefit
- The 104-week look-back works even if you went live before the earnings history existed.
- No gap in the calculation for longer-serving employees.
- The compliance work does not stall on missing historic data.
Standard absences, three years on from a council customer
From the sessionOne of our council customers shared their experience, and three years on the benefits are clear.
The challenge
- Many organisations built their own custom absence plans at go-live. Every statutory change since has meant another round of configuration work for a team that has plenty else to do.
- Support is also moving away from custom absence plans, while issues raised on standard absences are fully supported. Staying on custom plans slowly narrows the help available to you.
How Fusion Practices solves it
- We move customers from custom plans onto standard absences, and prove the results against their own payroll before they rely on them.
- One of our council customers has run standard absences since going live three years ago. Assumed pensionable pay for the local government pension scheme is calculated for them, and after a year of checking the results they found no issues.
- Statutory change now arrives ready to use. This year's changes to statutory sick pay came through in the 26A quarterly update and could be used straight away, and the balances for neonatal leave arrived in 26B.
The benefit
- Statutory change arrives ready to use, with no configuration effort from your team.
- Assumed pensionable pay for the local government pension scheme is calculated for you.
- You stay on the fully supported path as support moves away from custom plans.
The SOAK programme, quarterly updates six weeks early
From the sessionSeeing each quarterly update before it reaches your live system.
The challenge
- Quarterly updates can introduce problems. Without an early look you meet them once they have already reached your live system and are affecting real pay and real people.
- By that point the problem is urgent, visible to the business, and being fixed under pressure.
How Fusion Practices solves it
- Our SOAK programme puts the quarterly update into one of your environments six weeks before it reaches production.
- It does mean extra testing. In return you find the problems early, the service requests you raise get worked very quickly, and fixes come through weekly across the whole testing window.
- We run the testing alongside your team, so the effort does not land entirely on the people who also have a payroll to deliver.
The benefit
- Problems are found six weeks before the update reaches your live system.
- The service requests you raise get worked very quickly.
- Weekly fixes all the way through the testing window.
Payroll parallel run, and what your variance means in people
From the sessionPractical advice from a payroll manager who has been through it.
The challenge
- A variance percentage on its own tells you very little. Work out what it means in people. If your parallel run is out by 5 per cent and you employ 10,000 people, that is 500 employees who may be paid wrong, all of them ringing you on payday, on top of your normal calls, while your team is still learning a new system.
- Context matters as well. A 20p tax difference between the two systems that you can explain is fine. A 20p shortfall in someone's gross pay is not, because they will call.
- The harder question is what is still open at the end. How many people have not reconciled, what is being done about each of them, and what happens if they are still unresolved on the day you go live.
How Fusion Practices solves it
- We set tolerances by what the difference means to the employee rather than by one blanket number, and we size the number of runs to the state of your data. Their last parallel run matched 99 per cent on gross and net pay within a tolerance of about 5p. They planned two runs and did three because of data migration issues. Two can be enough if the runs are good.
- We track the unreconciled population by name, not by percentage. For every person still showing a difference we record the reason, the action being taken and who owns it, and we agree a mitigation plan before go-live so nobody enters their first live pay run with a difference nobody has explained, however small.
- We get senior payroll people from your business-as-usual team involved. If they cannot join the runs, we ask them to write down the odd scenarios they deal with, such as retro going back 12 months, or one person holding two assignments on different terms and conditions. Those are the cases that appear in month one.
- We write the how-to guides before the team touches the new system, track testing against the plan, and resolve issues as they come up rather than parking them. At go-live we run the live payroll early and reconcile employer liabilities, statutory payments, national insurance, apprenticeship levy and pensions, which are the ones most often missed. And we look after your payroll team. They carry the responsibility for this payroll and they need support.
The benefit
- Fewer wrong-pay calls in month one, because tolerances are set by what the difference means to the employee.
- You reach go-live knowing exactly how many people are still unreconciled, why, and what is being done about each one.
- Nobody is left carrying a pay difference, however small, that nobody has explained.
Weekend starters, leavers and who can see salary
From the sessionAn open discussion closed the session, on the decisions the system does not make for you.
The challenge
- If someone starts on Monday the 3rd and the 1st and 2nd fall on a weekend, do you pay them from the 1st or the 3rd? The same question applies when people leave.
- We also compared notes on who inside HR can see salary data. It is common to find the whole HR team can, and whether that is a problem depends on your sector.
- Neither of these is a system setting waiting to be switched on. They are policy decisions, and if nobody makes them deliberately they surface in month one after go-live.
How Fusion Practices solves it
- We put these in front of you as decisions, help you land on the answer that fits your sector and your terms and conditions, then configure the system to match.
- On starters and leavers, most organisations on the call pay strictly from the actual start date, on the basis that the previous employer will have paid up to the weekend and the contract itself states the 3rd. The same logic applies to leavers, paid up to the Friday. The exception raised was teachers, whose terms say term starts on 1 September, so they are paid from the 1st even if they walk into the school on the 6th.
- On access, most public sector organisations give the whole HR team access to salary data, and because grade structures are defined and visible that works. In the private sector, where pay is negotiated individually, it is common to restrict salary visibility to one person within HR through a separate security profile. If you want to restrict access, that is how it is done.
The benefit
- Starter and leaver rules decided on purpose, not discovered in month one.
- Salary visibility set to match your sector and your pay model.
- The system configured to match the policy you have chosen.
If you take five things from the session, take these
Paying holiday pay correctly is no longer enough. You have to be able to prove it
- Holiday pay must be based on average earnings over the previous 52 paid weeks, looking back as far as 104 weeks to find them.
- Since 6 April 2026 you must also keep adequate records of entitlement, leave taken and how the pay was calculated, for six years. Not keeping them is a criminal offence.
- This is a legislative requirement, not a recommendation. It applies whatever system you run.
- We have built two ways to run the calculation, one through absence and one through overtime, and both are in testing now.
Let statutory change arrive ready to use, not as another configuration job
- Standard absences take statutory updates straight through, with no configuration work from your team.
- A council customer has run them for three years and found no issues.
- As support moves away from custom absence plans, standard keeps you supported.
Find update problems six weeks before they reach live pay
- Our SOAK programme gives you each quarterly update early in one of your environments.
- It means extra testing, but problems are caught before they affect real people, with weekly fixes throughout.
A 5 per cent parallel run variance in a payroll of 10,000 is 500 people paid wrong
- Translate the percentage into people before you agree to it.
- Set tolerances by what the difference means to the employee, not by one blanket number.
- Know how many people are still unreconciled, what is being done about each one, and what the mitigation plan is before go-live.
- Look after your payroll team. They carry the responsibility for this payroll and they need support.
Some payroll rules are policy, not settings
- Weekend starters and leavers, and who can see salary, are decisions you have to make on purpose.
- The system can do it either way. Decide deliberately rather than discover it in month one.
Teams running Oracle Cloud HR and Payroll
This is for organisations that need to meet the new holiday pay requirement and get more out of standard functionality, in particular public sector and not-for-profit employers with the local government pension scheme, 24/7 services or regular overtime, and payroll teams planning or running a parallel run ahead of go-live.
HR and payroll leaders
- HR Director
- Head of Payroll
- Payroll Manager
- Reward Manager
Oracle Human Capital Management application owners
- Oracle Human Capital Management Manager
- HR Systems Manager
- Human Resources Information Systems Lead
- Enterprise Applications Manager
Finance and pensions
- Finance Manager
- Pensions Manager, local government pension scheme
- Payroll Controller
HR and Payroll
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