Amid the turmoil of the pandemic, on the 6th April 2020, the UK government introduced the Key Information Document (KID) as a part of their Good Work Plan, in an attempt to improve pay transparency for agency workers. This document is required in order to comply with Regulation 13A of the Conduct Regulations (Conduct of Employment Agencies and Employment Businesses Regulation 2003).
The KID was introduced in an attempt to improve pay transparency for agency workers and to provide them with essential, standardised information regarding their assignments. The legislation also states that the document must be provided to the worker prior to agreeing on the terms of engagement.
Where an ‘intermediary’ or umbrella company is involved in the payment of the worker, the KID must be issued to the individual AND also to the intermediary or umbrella company.
The KID must be no longer than two A4 pages and be easy to understand. The document should highlight the key information of the contract, such as the rate of pay and payment terms. This document is a protection for the contractor as it gives them an overview of the payment that they are to receive, and lists all possible deductions that they may see detailed on their payslip.
The responsibility of the KID document essentially lies with the recruitment agency, however, HMRC recognises that there may be some information required to receive from a 3rd party such as an umbrella company. Therefore, robust communication channels must be maintained between the 2 parties to ensure compliance requirements are met.
The standards set by the KID have been outlined in guidance from the government. As such, the documents must provide the following information to their contractor:
Where a contractor is paid through an umbrella company, the KID must show the relevant deductions that will show on the individual’s payslip such as Employer’s NI, Employer’s pension contribution, Apprenticeship Levy (where applicable) and the umbrella margin or fee. All deductions should be clear, and the worker should be able to track the difference between the gross amount paid by the employment business and the sum that they receive.
Because the figures in a KID do not need to be precise, they do not necessarily need to be revised for each new assignment. They only need to be updated when the information contained within them changes; this could be the introduction of a new deduction, a change in pay intervals or change of intermediary or umbrella company.
A recent survey has highlighted that only 33% of contractors know what a KID is and only 14% had received one. Understandably the new measure has been overlooked by many given the national crisis of 2020, but now that there is light at the end of the tunnel, recruiters will need to increase their consistency of adherence with the KID process. The Employment Agency Standards inspectorate will enforce compliance with this regulation.
At Umbrella Contracts limited, our Management Team worked closely with the Compliance Director and started preparing for these changes in 2019. We have maintained strong communication with the BEIS with regards to our understanding and practices as an umbrella company, and have documents and policies in place.
Post April 2020,we have worked closely with our agency partners to ensure that all stages of the chain are compliant with the Key Information Document Requirements.
If you have any questions about this document please contact us, our team would be happy to guide you. Our compliance pack also contains a template that covers all of the essential items, and we have an editable version with all of the fields to complete highlighted to make it as easy as possible.