As a recruiter, it’s paramount that you’re kept up to date with any changing legislation. One of these upcoming changes which you need to be aware of is the introduction of Key Information Documents which is contained in the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019.
Key Information Documents were introduced on 6th April 2020 as an attempt to increase pay transparency for agency workers and provide key information regarding their assignments. The new legislation inserts an amendment into the Conduct of Employment Agencies and Employment Businesses Regulations, or ‘Conduct Regulations’.
But do you know what this means for your business? We’ve compiled our guide to provide all of the information you need about Key Information Documents, what they could mean for umbrella employees and if there’s anything you need to do.
Key Information Documents: What does this mean?
Under this new legislation, work-seekers are entitled to receive Key Information Documents (KID) from their employment agency. As of the start of the 2020/21 tax year, Key Information Documents must outline:
- The information which relates to the relationship between the ‘employment business’ the ‘work-seeker’
- The nature of work and the number of hours along with any remuneration or fees which may impact the worker’s pay.
- Entitlement to employee benefits such as holidays.
- An estimate of the net payment to be issued to the worker after all deductions have been taken into account.
- Who the employer is and who is paying the worker.
Although the responsibility for providing this document sits with the ‘employment business’, this is the recruitment agency, HMRC guidance states that you may rely on information provided to you by a third party.
The purpose of the new regulations is to improve transparency for agency workers with a number of issues such as pay. A key feature of the legislation is that the KID must be provided to all work seekers - this gives workers access to pay information before agreeing terms with an employment business. The document will also grant workers with information about how fees and deductions will affect their pay. If the business works with multiple umbrella companies, it is best practice to provide a Key Information Document to the worker for each provider.
What could Key Information Documents mean for agencies?
From April 2020, agencies must provide details of the work seekers likely gross pay and deductions at the point they become a ‘work seeker’, this means the point at which they register with your recruitment agency This applies for workers that you plan to engage on your own payroll, via an umbrella company or through their own Personal Service Company (PSC). In practice, this may mean providing three KIDs to all worker seekers that register with your employment business or possibly more if you have several umbrella companies on your Preferred Supplier List (PSL).
It is also important to note that a new KID will need to be issued when the facts contained within them change. This could be a change to pay frequency, the introduction of a new deduction or a change in umbrella company.
What could Key Information Documents mean for umbrella employees?
For umbrella employees, these changes will mean an increase in transparency. The Key Information Document will be provided to the work-seeker prior to terms being agreed and this means that work seekers will understand the deductions that will be made from their pay prior to making a decision as to whether to accept the engagement.
When do I need to start issuing Key Information Documents?
All work seekers must be issued with a Key Information Document from 6th April 2020. Workers who are already engaged in contracts will not need to be issued with a KID unless the information that would be contained within it changes.
What should Key Information Documents include?
The following information must be included in the document:
|Information||What does this mean?|
|Name of worker||This is not required by regulation, but businesses may find it useful.|
|Contract type||The type of contract which the worker will be engaged under.|
|Who pays the worker||The employment business or umbrella company.|
|Rate of pay||This can either be the exact rate of pay or the minimum rate expected.|
|Payment dates and intervals||How often the worker is expected to be paid, usually either weekly or monthly.|
|Any statutory deductions||A list of any statutory deductions must be included, though exact amounts aren’t needed. This will include costs such as tax and National Insurance, along with any other deductions like student loan repayments.|
|Any non-statutory deductions||Non-statutory deductions must include either the amount to be deducted or a description of how this calculation will be made. This will include costs such as private healthcare.|
|Fees for goods and services||Again, this must include either the amount to be deducted or a description of how the calculation will be made.|
|Any additional benefits||This outlines any non-monetary benefits which the worker may be entitled to.|
|Holiday entitlement||This details any holiday pay which the worker is entitled to.|
The document must be succinct (no more than 2 pages of A4) and easy to understand. It is not intended to be contract of employment, but instead to outline key information.
Stay up to date
In a world of ever-changing legislation, finding the right information isn’t always easy. That’s why the team at Parasol are always on hand to help. To find out more about the upcoming legislation and how it may impact you, speak to your Parasol recruitment partner or contact us directly.