With IR35 reforms dominating the agenda for so many months, it’s not surprising that the new rules relating to Key Information Documents have slipped somewhat under the radar. However, from April 6th 2020, all employment agencies must make arrangements to provide a Key Information Document (commonly referred to as ‘KID’) to workers before they agree terms, so it’s vital to be prepared. The need for KIDs came out of Matthew Taylor’s Review of Modern Working Practices, published in July 2017, and the reforms introduced by the government in response. As more people swap the regular 9 – 5 in favour of flexible working, the Taylor Review, as it’s now known, reflects the government’s desire to protect workers’ rights and the tax regime in our changing employment landscape. It is the responsibility of the agency to prepare and supply the KID to workers and other organisations involved in the supply of a contingent workforce, such as an umbrella company. KIDs must be provided to workers who begin assignments after April 6th and do not need to be issued retrospectively i.e. to workers who took up roles or assignments before that date.
Improving transparency
The KID aims to ‘improve transparency of information for agency workers, particularly around pay. It will give agency workers more immediate access to key pay-related information …and a clear idea of how any fees and deductions will affect their pay.’ Importantly, the figures in the KID ‘will not need to be completely reflective of what an agency worker may go on to earn in an assignment, but rather will demonstrate how a proposed rate of pay is affected by fees and deductions made throughout the supply chain.’ It’s worth noting that it would be considered good practice to offer multiple KIDs to workers if a number of engagement methods, i.e. agency PAYE, umbrella or other intermediary are presented, though the main priority is to ensure the agency worker receives a KID reflecting the details of the final choice made.
Required information
Whilst employment agencies have an element of discretion, there are some aspects of information which are compulsory, including (but not limited to): • contract type and name of intermediary or umbrella company • Rate of pay to the intermediary or umbrella company, statutory and non-statutory deductions from the intermediary or umbrella company income • Expected or minimum rate of pay, statutory and non-statutory deductions from the individual’s pay; leave entitlement and benefits. The document must also include an example statement that specifies how all deductions and fees will affect a proposed rate of pay over a single prospective pay period so that the worker has a clear example of how any deductions listed in the KID will affect their take-home pay. Numbers may be estimated but should be as close as possible to the actual rate of pay subsequently received.
Preparing KIDs
Detailed guidance has been prepared by the government to help employment agencies to understand the required procedure for issuing KIDs. Del Williams, sales director for JSA Group comments: “Working in partnership with agencies is key for our business, so JSA has sought to help our agency partners to create KIDs seamlessly and easily using an online interactive tool and a downloadable template. The tool shows calculations and comparison take-home pay examples at different rates of pay, showing umbrella margin, employment costs, worker’s salary, holiday pay, tax and National Insurance to produce a worker’s net pay calculation.” Agencies can use the interactive tool to calculate all of the relevant deductions based on the rate that is most applicable to the role they are advertising. It’s just another added value service JSA offer in the market.’
The long-term impact
It will be interesting to see what the world of flexible working looks like in 12 months as the KID rules and IR35 reforms bed-in. However, as always, the agencies who seek to work with the rules, not against them, will always be in the strongest position.
Source and More info: Providing a Key Information Document for Agency Workers, BEIS. https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/865808/key-information-document-for -agency-workers-business-employer-guidance.pdf
