We Need to Talk About the KIDsThere’s a widespread non-compliance issue that isn’t getting the airtime that it should, especially considering how many agencies are not meeting their responsibilities in this area.
That’s right, we’re talking about KIDs, or Key Information Documents. In this article we’ll talk about what they are and how to meet compliance requirements.
New legislation for regulation 13A of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 introduced the requirement for agency workers to be provided with a key information document. The legislation came into force on 6th April 2020, but largely slid under the radar possibly due to the pandemic, and has not received the media attention of other, perhaps more glamorous, legislation changes.
Nonetheless, Key Information Documents have been mandatory for over two years, but several reports suggest that many agencies are failing in their duty to provide them, leaving themselves at risk of the consequences of non-compliance and not giving workers the information that they are entitled to.
What is a Key Information Document (KID)?A key information document is designed to ensure that agency workers have complete transparency of information regarding their placement, particularly around their pay.
KIDs must be issued to all agency workers whether they are agency PAYE, inside IR35, outside IR35 or employed by an umbrella company.
The document must include the following information:
- Name of worker
- Contract type
- Identity of the employment business
- Name of intermediary or umbrella company
- Who will pay the worker – this will be the umbrella company if working through an umbrella, the agency if directly employed
- Any business connection between the intermediary or umbrella company and the employment business – such as shared directors or if one company controls the other
- Rate of pay
- Any other benefits – non-monetary benefits such as gym memberships etc
- Pay intervals – both from the employment business to the umbrella, and from the umbrella to the worker
- Statutory and non-statutory deductions – including Income Tax, National Insurance, Student Loan, private healthcare, pensions etc
- Any employment costs or fees – examples include fees and DBS checks; it must be made clear whether these are one off or ongoing costs
The key information document should also include an example statement to show workers how the deductions might impact their final pay.
Who issues a KID? Agency or umbrella?All Key Information Documents must be sent by the recruitment agency and not the umbrella. As stated in the legislation, “In all cases it is the responsibility of employment businesses to provide agency workers with a key information document, including when the agency worker is engaged through an intermediary or umbrella company.”
When should KIDs be supplied to workers?The guidance suggests that best practice is to issue a KID at three different points of the recruitment and employment journey.
Prior to employmentA standard KID or KIDs should be delivered when reaching out to a candidate for the first time. At this stage, multiple KIDs might be issued for one role, to include information about all the payroll options on offer, including being employed by an umbrella or other intermediary.
At placementWhen a candidate is placed in a role, a specific KID should be provided, giving full details of the role and particular information regarding their pay and deductions.
When any pay element changesIn the event of a change to a candidate’s pay, including when deductions are added or removed, a new KID should be issued to reflect the changes.
What happens if I don’t supply a KID?The Employment Agency Standards inspectorate (EAS) enforce this legislation, and they have the power to apply penalties including prosecution and unlimited fines.
And while the issuing of KIDs appears to be one compliance area that is being overlooked by many agencies, the introduction of a Single Enforcement Body will place much more scrutiny on which employment agencies are meeting their compliance requirements, and with that scrutiny undoubtedly comes enforcement.
We at Ship Shape want to help our clients maintain their compliance responsibilities. If you need more information about KIDs, or any other employment related compliance queries, don’t hesitate to get in touch.