Written by Brabners LLP
Key Information Documents
It has been almost 2 years since the requirement to produce Key Information Documents (KIDs) was introduced on 6 April 2020.
Here’s a reminder of who has responsibility for preparing a KID, what information it needs to include and when it has to be updated.
KID – why is it needed and who is responsible?
The intention behind the introduction of Key Information Documents was to make it as clear as possible to a worker what their take-home pay will be, bearing in mind any deductions which will be made from their gross pay, and to provide them with other key information.
Regulation 13A of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the “Conduct Regulations”) came into effect on 6 April 2020. Regulation 13A requires all employment businesses (i.e. agencies) to provide work-seekers with a KID, before the employment business and the work-seeker agree the terms by which the work-seeker will undertake work (essentially, before entering into a contract).
Work-seeker in this context includes a corporate work-seeker such as an umbrella company or a personal service company, in which case both the corporate work-seeker and the individual who will actually do the work need to be provided with a KID by the employment business.
This means that under the Conduct Regulations it is the agency’s responsibility to prepare the KID and to provide a copy to the umbrella company and the individual; it is not the umbrella company’s legal responsibility. That said, it may be difficult for the agency to put an accurate pay rate in the KID without getting input from the umbrella company, hence why the FCSA expects its members to cooperate in the process.
BEIS has produced guidance called “Providing a Key Information Document for Agency Workers”, which is intended to assist employment businesses to understand the requirements relating to Key Information Documents. The guidance can be accessed here.
What pay information needs to be included in a KID?
Since the primary intention behind KIDs is to provide agency workers with as much clarity as possible about what their take-home pay will be, each KID should be bespoke to the worker. The rules say that the KID either needs to set out the actual “rate of remuneration” payable to the umbrella company and the individual, or the “minimum rate of remuneration the employment business reasonably expects to achieve” for the umbrella company and the individual, which means the KID could refer to a minimum amount such as National Minimum Wage if appropriate, or the minimum agreed day rate for that worker, for example. This means that the KID should be a rate-specific document, not a generic one, as far as possible.
Amongst other things, the KID also needs to contain details of any costs and deductions required by law which will affect the worker’s pay, as well as any other deductions or fees which may apply. Deductions required by law would include, for example PAYE income tax and employee national insurance contributions (“NICs”).
When does a KID need to be amended?
A new KID needs to be issued in certain circumstances. The BEIS guidance referred to above suggests that KIDs do not have to be revised every time an agency worker begins a new assignment. A new KID is only required when the facts in the KID change. Changes suggested by the KID guidance that would trigger the need for a new KID to be issued include:
- A new deduction being introduced (such as student loan repayments or contributions to a private healthcare scheme)
- A change in pay intervals
- A change in intermediary or umbrella company paying the worker
- When the worker’s right to equal treatment under the Agency Workers Regulations 2010 takes effect
Our view is that a KID would also need to be re-issued where there is an increase to an existing deduction such as the proposed increase to the employee NIC rate in April 2022.
Similarly, when the separate Health and Social Care Levy is introduced, KIDs will need to be updated and the levy would need to be listed as a separate deduction.
The Conduct Regulations require a revised KID to be issued no later than five business days from the day on which the change occurred, and the revised KID must state the date on or after which the change takes effect.
Please contact Brabners if you require advice about your obligations in relation to Key Information Documents.
This bulletin is for general guidance purposes only and should not be used for any other purpose.
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