Key Information Document (KID)
Key Information Document regulation comes into effect from today 6th April 2020.
Regulation 13A of the ‘Conduct Regulations’ (Conduct of Employment Agencies and Employment Businesses Regulations 2003) introduces a requirement to provide a ‘Key information document’ for agency workers.
All agency workers must be given a key information document before agreeing terms with an employment business. In practice this will mean that the key information document will be one of the first things they receive.
The regulation does not apply to agency workers with existing terms with an employment business, but they will be entitled to a key information document when they sign up with a new employment business.
Changes to regulations around written statements also come into force on 6 April 2020.
From this date, all agency workers classed as employees or workers will be entitled to both a written statement and a key information document.
Purpose of the Key Information Document
The key information document is intended to improve transparency of information for agency workers, particularly around pay. It will give agency workers more immediate access to key pay related information before agreeing terms with an employment business and a clear idea of how any fees and deductions will affect their pay.
Businesses are not expected to include all relevant contractual information within the key information document. It is rather designed to present key information in order to give agency workers a brief overview of how their prospective terms of engagement affect their pay over the course of an assignment or other specified period of time.
The figures in the key information document will not need to be completely reflective of what an agency worker may actually go on to earn in an assignment, but rather will demonstrate how a proposed rate of pay is affected by fees and deductions made throughout the supply chain.
Key information documents are intended to give agency workers a number of pay related facts, along with some other details about their engagement, prior to agreeing terms with an employment business. This is so they have more information about their pay at an earlier stage, particularly so that they can see how deductions and fees affect their pay through the supply chain.
As key information documents must be given to agency workers before agreeing terms, the figures given within them do not have to fully reflect the precise figure that workers will make on an assignment-by-assignment basis. They must, though, clearly reflect the minimum amount an employment business expects to achieve for an agency worker (for example, not less than national minimum wage). They must also include a description of all deductions to be made to a worker’s pay. For statutory deductions (e.g. income tax), this can just be an explanation that the deduction will be made. For non-statutory deduction and fees (e.g. an umbrella company’s margin), the key information document must EITHER state the amounts to be deducted OR explain how they are calculated. Key facts pages must also include representative example statements to demonstrate how the listed deductions will be made to a rate of pay.
Real numbers must be used in the example statement: actual figures must be given as opposed to simply listing the types of deductions made and their method of calculation, as is acceptable in the rest of the key information document. These figures may be estimated and do not need to exactly reflect the specific rate of pay subsequently received by the agency worker, but they should demonstrate in a realistic way the deductions made to a proposed rate of pay and how these affect a worker’s take home pay.
Where employment businesses have multiple ways of paying an agency worker (eg. subject to PAYE or through different umbrella companies) it is expected that the business will have a standard key facts page corresponding to each payment method. It may be helpful to show each new worker the different key facts pages corresponding to those payment methods, so they can understand the different deductions they lead to and help them choose which method to use.
However, this is not required by the regulation. Ultimately, an individual worker must at least receive a key information document that reflects the payment method that they are to be contracted under. Because the figures in a key information document do not need to be precise final figures, they do not necessarily need to be revised for every assignment. They only need to be updated as and when the information contained within them changes. This might for example be when a new deduction is made, such as student loan repayments or contributions to a private healthcare scheme, or when a worker’s right to equal treatment under the Agency Workers Regulations 2010 takes effect.