On April 6th 2020, the government introduced regulations that mean new agency workers must be given a ‘Key Information Document’ (KID) containing important information before agreeing on terms with an agency.

The regulation doesn’t apply to agency workers with existing terms, but workers must be provided with a KID when they sign up with a new agency, whether they operate via agency PAYE, their own limited company or an umbrella company.

Whose responsibility is KID?

Issuing a KID is the responsibility of the agency. Agency workers must receive the documents before signing contracts with the employment business, regardless of how they intend to be paid. Unlike other parts of the 2003 Agency Conduct Regulations, there is no ‘opt-out’ for KID.

So as per the government’s intention, and Matthew Taylor’s before that, the legislation came into force in April to help temporary agency workers gain a better understanding of the deductions made from their agreed rate, and a better understanding of how this impacts their net pay.

What should be included in a KID?

Under the new legislation, Key Information Documents are required to state:

  • The employer name, and who is paying the worker (if the latter is different)
  • The information which relates to the relationship between the “employment business” (or agency) and the “work-seeker” or umbrella company if there is an umbrella company in the supply chain
  • The details of any deductions (statutory or otherwise) that will affect the worker’s pay
  • Employee benefits (e.g. health insurance)
  • Estimated net payment after all deductions have been taken into account
  • Pay frequency
  • Any statutory deductions (e.g. tax, national insurance)
  • Any non-statutory deductions (e.g. private health care)
  • Fees for goods and services
  • Any additional benefits
  • Holiday entitlement

Pay Illustration

  • Each KID must demonstrate how deductions made will impact the worker’s pay. This illustration of pay does not have to be precise but must use actual representative figures.
  • A representative example statement should take the form of a table, highlighting a work-seeker’s income and how deductions will be applied. It should first state the gross pay, before listing all deductions, fees, charges and benefits that will impact the take-home pay amount.

The government has published various templates that agencies, umbrella companies and Personal Service Companies can use to provide the necessary information to individual workers.

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