Firstly, it is worth pointing out that the Key Information Document is not actually a new requirement. In fact, it has been around for over a year, but what is new is that as of April this year, the enforcement of it (much like IR35) means the clients of an umbrella company are in the position of being responsible if things go wrong. That’s not a great position to be in and why it is suddenly a hot topic. Secondly, the really good news is that if you have a good back-office system in place, the information you need for KIDs should be at hand. Just for completeness, let’s start with a quick overview look at what the KID is, what it is for and why it has been introduced.
In April this year, it becomes mandatory to produce a KID for agency workers if you are a hirer, an intermediary or umbrella company or an agency. The purpose of the document is rather sensible in that it is an attempt to create a method of improving transparency around information for agency workers. I doubt there is a recruiter in the country who hasn’t had to spend time explaining a simple misunderstanding of terms and conditions or pay to a worker at some point in their career. With that in mind, a document that clearly explains these things in simple terms seems a reasonable idea.
So, that is essentially what the KID is. It is a plain English explanation of what a worker can expect from their employment in several key areas. As you would expect, a lot of the information you need to put in will be around wages and deductions. Again, this is all about transparency and the worker being able to clearly estimate what their deductions and pay will be and why.
What goes in, and when is it given out?
To deal with the second part of that first, you must give the worker a KID before they sign their contract with you. Remember, the intention of the KID is to give them a general idea of what they can expect, not to agree specific terms. So, the good news is that you don’t necessarily need to re-issue it if the worker changes assignments. A new KID is only required if there is a change to terms.
Even better news is that there is no need to backdate Key Information Documents for most existing workers who were with your agency before April. For your own peace of mind, though (and because we can’t cover every eventuality in this article), we suggest you take a look at the .gov information about when to issue a KID. As a rule of thumb, though, if you aren’t sure, issuing a KID would seem to be the safe option.
To boil down the main parts of the KID then, you should include the following information as relevant to the worker. There is a real importance behind this because, of course, it is the umbrella company, not the client, who is responsible for paying the worker. You need to get these details right. In general, though, the KID should be no more than two sheets of A4, and you must include:
- Name of worker
- The type of contract you will be issuing
- Recruitment business identity
- Who will pay the worker at what rate and what interval
- Examples of statutory deductions
- Any other fees
- Benefits, if there are any
- Entitlement to leave
It must also be clearly marked with other information, such as what the document is for, who is issuing it, details of the employment agency standards and/or ACAS as appropriate. In fact, compared to the reams and reams of additional support and advice issued around IR35, the KID document guidance is relatively simple. Thankfully it is actually very prescribed in terms of what the content needs to be.
So overall, yes, there is likely to be a new administration burden in issuing the KID document but, as the information needed in the KID is likely to already be available in your existing systems, you should be able to pretty much click and send.
If you can’t, then call us, and we can talk about how we can help with your compliance and make sure you are producing the right information on time, every time for your clients and workers.