The introduction of Key Information Documents (KID) took effect on the 6th April 2020. Although the launch of KID went slightly under the radar due to the current climate and postponement of IR35, this amendment to the conduct regulations went ahead as planned.
The new legislation has taken almost three years to come to fruition, following the publication of the 2017 Taylor Review of Modern Working Practice. The Government accepted the majority of the recommendations made and launched further consultations, the result of this being The Good Work Plan which sets out a vision for the future of the UK labour market. The introduction of Key Information Documents stems from the Good Work Plan, and is intended to increase transparency for agency workers. Particularly with regards to pay.
From 6th April 2020 all employment business must provide a Key Information Document to all work seekers, regardless of how they intend to be paid and unlike other parts of the Conduct Regulations, it is not possible to opt out of this new regulation.
What information is required?
Businesses are not expected to include all contractual information in a KID but should list the core facts of employment to give an overview of the working relationships, as well as a clear explanation of how their pay is affected by deductions throughout the supply chain.
All KIDs must include the following as standard:
- The employer name and who is paying the worker (if this is different)
- Information which relates to the relationship between the “employment business” and the “work seeker” or umbrella company if there is an umbrella company in the supply chain
- The details of any deductions (statutory or otherwise) that will affect worker’s pay
- Employee benefits (e.g. holidays etc.)
- Estimated net payment after all deductions have been taken into account
- Pay frequency
- Any statutory deductions (e.g. tax, national insurance)
- Any non-statutory deductions (e.g. private health care)
- Fees for good and services
- Any additional benefits
- Holiday entitlement
Pay illustration
An essential element of a KID is the pay illustration which must demonstrate how deductions made will impact the work seekers pay. Although this does not need to be precise, actual representative figures must be used.
For employment businesses using multiple methods of payment, for example PAYE or umbrella employment, they will be expected to have a standard document with information on each payment method.
The guidance recommends supplying each new work seeker with a KID for each possible method of payment to aid their understanding of the deductions and help them choose which form of payment is best for them. The guidance is clear however that recruiters can rely on information provided by third parties, including umbrella companies.
Best practice for creating and updating KIDs
Those who were already working for an employment business on 6th April 2020 will not need to receive a Key Information Document, as the legislation only applies to work seekers after this date.
If there is a change after this date which impacts upon the information included in the KID, for example a transition to a different umbrella company, new documentation must be issued within five working days of the change.
An updated KID is only required when the information contained within it changes, for example a new deduction impacts their pay such as student loan repayment or a private health scheme or where the right to equal treatment under the Agency Workers Regulations 2010 takes effect.
KIDs have now become an integral part of a recruiter’s role, but the task doesn’t have to be hugely difficult or time-consuming.
