Key Information Documents – New Guidance for Contractors
by on December 5, 2022
The government’s Department for Business, Energy & Industrial Strategy has recently updated its guidance for contractors regarding the information contained in their Key Information Documents (KIDS).
Here, we explain what to look for in a KID and why they’re so important if you’re a white collar worker working through an umbrella company.
KIDs were introduced on 6th April 2020, and require recruitment agencies to tell the contractors that they recruit on behalf of end clients crucial information about their assignments.
They fall under ‘The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019’ and, according to the government’s own information, are intended to provide transparency for contractors around such things as terms and conditions, and any fees or deductions affecting what your rate of pay will be before you sign a contract.
At a minimum, the KID you receive from your agency should include:
- Your name and contact details
- The type of assignment
- Who will be paying you
- How much you will be paid
- When you will be paid
- What deductions there will be (i.e. Tax, National Insurance contributions, pension contributions)
- What the umbrella company will charge
- Whether you will receive any in-work benefits
- What leave you are entitled to
They are particularly important if you’re working through an umbrella company, as they outline who will pay the umbrella company that ultimately pays you, and when.
Why are KIDs important?
It is the recruitment agency’s responsibility to put together the information contained in a KID, under the Conduct Regulations 2019, and pass it on to both the contractor and the contractor’s umbrella company. Agencies that do not prepare such a document are failing in their duty of compliance.
However, despite the proliferation of easily-adaptable templates, it can be difficult to obtain all the relevant information from the end client in order to pass it on to the contractor and umbrella, and many agencies are failing to either produce KIDs or supply the full information.
KIDs are important, not just as a matter of clarity for all parties involved (where terms and conditions are clearly laid out so that they’re simply understood by everyone), but also to enable contractors to be aware of potential unlawful treatment from unscrupulous umbrella companies. In the majority of cases, this can include being mistreated, being involved in tax avoidance schemes and being the victim of unlawful deductions such as salary skimming.
It is important to note that new KIDs must be issued to all parties when circumstances change. These can include such things as new deductions, changes in when the contractor will be paid, or if a contractor changes their umbrella company.
What can white-collar end-clients do?
For end clients, KIDs are a vital means of conveying the relevant information so that the contractor gets as full a picture as possible from the recruitment agency of exactly what they’ll be expected to do on their assignment, as well as the rewards they’ll receive and what they’ll have to pay in terms of umbrella charges.
The client will often produce a highly-detailed job description outlining the contractor’s duties and responsibilities so that they can be matched well, but often put less emphasis on the importance of providing the information they need to complete the KID form, which offers some means of protection to the contractor and can often be a deal-breaker in terms of whether they’ll apply for the role.
As it’s the recruitment agency’s responsibility to pass on this information to the contractor, it’s crucial that end clients work with their recruitment partners to ensure that the relevant information is available, and that recruiters make sure their clients understand exactly why KIDs are part of the compliance process.
KIDs help everyone by sharing important information, and it’s crucial that all parties are kept up-to-date with their current and potential new circumstances in order to stay compliant. The old saying ‘ignorance of the law is no excuse’ applies to everyone in the chain of client-agency-contractor-umbrella companies, and it is in everyone’s best interest to get it right.
Get in touch
If you’re a business, a recruitment agency or a contractor and would like to know more about KIDs and how they can protect everyone, call us on 0333 200 0845, email us at email@example.com or complete our contact form here.