While the eyes of many recruiters and contractors remain firmly focused on the proposed changes to off-payroll working in the private sector, another significant change is due to come into effect in April 2020: the Key Information Document (KID).
As of next year, employment businesses will be required to provide a KID to each worker at the very outset of an engagement ie before a contract is issued.
In the case of a Limited Company Contractor, the KID will be the responsibility of the employment agency (recruitment agency) and will need to specify:
- Details about the relationship between the employment business and the work-seeker.
- Details of pay and deductions.
- A pay illustration.
In the case of Umbrella contractors, the KID will be the responsibility of the employment agency and will need to specify all of the above as well as:
- Details of any fees charged by the Umbrella company for provision of its services.
- Details of employment costs such as employers’ National Insurance.
- Details of any additional employment benefits for Umbrella workers such as holiday pay, sick pay, access to a company pension scheme.
Whilst contractors (and recruiters) already have plenty of paperwork, this is welcome news to those of us who welcome increased transparency on pay and deductions. Compliant Umbrellas, including ours, suffer as a result of poor, non-compliant practice by the minority. Anything which makes it harder for non-compliant Umbrellas to hide costs or underhand methods of working out what tax a contractor must pay can only be a good thing for our industry.
Ongoing, because the explanation of pay and deductions will be more consistent between providers, contractors will be able to better compare their working options and make more informed decisions.
Already we provide recruitment agencies and Umbrella workers with detailed explanations and pay illustrations before an engagement begins, so the introduction of the Key Facts Document simply formalises what we have always considered to be good working practice.
If you have any questions about the Key Facts Document, please get in touch with our team.