The Key Information Document – a guide for Agencies

Back in 2018 the government outlined several employment law recommendations designed to improve working conditions, in the Good Work Plan. One of these recommendations was a change to the Conduct of Employment Agencies and Employment Regulations 2003, requiring that any worker who engages with a new agency must be provided with a Key Information Document (KID). KIDs outline exactly how a worker will be paid and it is now a requirement to provide one to any worker who joined your agency from April 6th 2020 onwards.

In this guide we take a closer look at KIDs, so you’re confident and comfortable with what you need to provide to your workers, and also how SG Umbrella can support you.

KID – the value it holds for workers

Once a worker has won their latest assignment, the next job on their list is to understand their payment options, delve into the different rates, employment deductions and which Umbrella Company to choose (if that’s their chosen path).

Many workers mix up their contract rate as given to them by their agency, with what their final pay will be. It’s important to understand that when using an Umbrella Company, a worker’s National Insurance, Apprenticeship Levy and the Umbrella’s margin are deducted from the worker’s contract rate as provided by you, the agency.

All these deductions are displayed on the Umbrella Company worker’s payslip, but without the worker properly understanding what these deductions are and why they’re made, you can be at risk of complaints, queries.

For more information on the level of support and information we provide to our employees regarding their payslip, take a look at our blog: Understanding your Umbrella Company payslip.

The KID’s main purpose is to put an end to any confusion over a worker’s pay and deductions. If issued correctly, a worker will be able to see exactly where their money is coming from, when deductions are made and who they go to, and finally how much net pay they’ll take home. By reviewing a KID as early into the process as possible, worker’s will have a clearer understanding of what their net pay looks like before agreeing to agency terms, ensuring a smoother future for everyone!

KID facts

Whilst it is a requirement for agencies to issue KIDs to workers, there is still a lot on confusion within the industry as to what a KID needs to include, when it needs to be provided to a worker, and the actual understanding of what a KID is by the workers themselves.

In the following section we look at key points every agency should know.

1. All workers must be issued with a KID

For any new workers that have joined your agency from April 6th 2020 onwards, you must provide them with a KID. If you have workers that have been with you before this date and have agreed to your terms then you’re not required to provide a KID, but best practice would suggest giving them one to ensure there’s no ambiguity over pay moving forward.

2. The KID must come from the Agency

Whilst the Umbrella company will provide an illustration to the worker based on the information provided they provide, the KID must come from the agency directly and reflect the actual rate agreed. At SG, we work closely with our agency partners and assist them with a KID to share with their worker. We’re also SafeRec accredited, meaning that all of our payslips are audited, with results available to both agencies and workers. This level of transparency means less questions and queries from workers AND a guaranteed level of compliance, minimising risk to your business.

3. Agencies don’t need to supply a KID for all potential payment models

If you as an agency you have several ways in which a worker can be paid, you many decide to provide them with a KID template for each method. Whilst it can be useful for the worker to have visibility on the different KIDs, it is not a requirement for agencies. They do, however, need to provide evidence of supplying a KID for the final payment method of choice to their workers, as per the Conduct of Employment Agencies and Employment Regulations 2003.

4. A new KID is if there are any significant changes

If any information changes within a KID, a revised version must be supplied to the worker within 5 working days of the change. A change in information could relate to a new deduction (such as a change in pension contributions, or student loan), if there’s a change in the Umbrella Company, or your payment frequency changes (ie from weekly to monthly).

5. A new assignment doesn’t necessarily mean a new KID

If there are no changes to the previous KID provided to the worker when starting their new contract (and using the same payment method), then a new one does not need to be issued. If there are changes then a new KID must be issued within 5 working days of that change.

6. The KID must display the minimum amount the worker can expect to receive

It’s impossible for a KID to remain the same throughout a worker’s assignment from when it’s first issued, therefore the KID should reflect the minimum amount that the worker can expect to earn, and not the final exact amount per week. KIDs must include basic information about the worker’s contract, pay and the pay’s arrangement, along with any confirmed deductions.

What a KID should include

KIDs must include the following elements:

1. Basic worker information – including the contract / assignment, their minimum pay rate and the chosen pay arrangement

2. Statutory and non-statutory deductions – any deductions that will be made to the worker’s pay must be listed. For deductions such as PAYE tax, NICs, etc, the KID only needs to state these deductions will be made, however for non-statutory deductions such as an Umbrella Company’s margin the exact amount needs to be listed and explained

3. Non-monetary benefits / holiday pay – if the worker is due to receive any non-monetary benefits or holiday pay, this must also be included in the KID

4. Example statement of an illustrative rate of pay – the KID must include a representative example statement of what the worker’s final pay will look like, including all deductions. Real numbers must be used in the example, and not just explanations, but does not need to be the final figures the worker can expect to receive. Effectively the

example statement is just that, an example, to showcase to the worker how pay deductions can affect their overall take home pay

What should the KID look like?

All KIDs must:

· Be easy to understand and follow

· Be no longer than two A4 pages

· Be clearly labelled and sectioned

· Be explanatory of what a KID is for, and how the worker can use it to understand their pay

· Include the Employment Agency Standards (EAS) inspectorate details at the beginning of the KID KID templates can be found on the gov.uk website. Be careful not to remove any required information when editing them. Alternatively take a look at one of the example KIDs we’re able to create for you – just ask!

How can SG Umbrella help you with your KID requirements?

When it comes to legislation it’s important to get it right first time, and whilst it’s the agency’s responsibility to issue a correct KID to its workers, we’re well-rehearsed in what KIDs need, how they should look, and what our umbrella employees expect from theirs.

For more information on how we can work with you to make light work of KIDs, payslips and umbrella work in general, please reach out to us on newbusiness@sg-umbrella.co.uk 01962 896954.