A new KID on the block for agency workers
From 6 April 2020, regulation 13A means that workers must be issued with a key information document before they agree on terms with employment agencies. Samantha Mann explains what the regulation requires.
The aim of Regulation 13A of Conduct of Employment Agencies and Employment Businesses Regulations 2003, is to ensure that all agency workers are provided with the key facts before they agree terms with a new employment agency. It will affect agreements from 6 April 2020.
Where a contract is ongoing as of 6 April, the key information document (KID) won’t be needed. However, the BEIS guidance suggests that where an ongoing relationship hasn’t resulted in recent work and a P45 hasn’t been issued, it would be best practice to provide the KID for new assignments after 6 April 2020.
What is the KID’s format?
BEIS has published three examples of how the information could be displayed in a KID for three possible employment relationships:
- Annex A – PAYE agency workers
- Annex B – Agency workers paid via an umbrella company
- Annex C – Agency workers who provide their services through a Personal Service Company (PSC)
These are only examples, and the employment agency is free to adopt whichever layout best suits their current practice.
The KID must be no longer than two pages of A4, unless in large font for accessibility reasons. In that case, the agency can include a summary with a reference to where the complete details can be found.
Timing, frequency and recipients
Where there is an intermediary or umbrella company involved, the KID must be given to both the organisation and to the individual agency worker.
The KID should be re-issued where a key fact changes or where a worker enters into a new working arrangement with an employment agency – it is not assignment specific. Additionally, where a worker’s right to equal treatment under the Agency Worker Regulations 2010 takes effect, an updated KID must be issued to the worker.
For ongoing agreements subject to change, the KID will need to be provided within five business days of any changes made. For example, where deductions such as student loans or private health care have changed.
Multiple engagement methods
Some employment businesses offer workers an opportunity to work directly for them or through an intermediary or umbrella company. Employment businesses are under no legal obligation to provide multiple KIDs. However, BEIS suggests that it would be considered best practice for them to hold a standard key facts page reflecting the details of each payment method that will enable the workers to be able to make an informed decision.
In any event, the worker must be provided with a KID of the engagement method they choose.
Agency worker relationship
An agency worker who is directly engaged and paid by the employment agency will be subject to statutory deductions such as PAYE and Class 1 NICs.
The following facts must be provided within the KID:
- Name of worker
- Contract type
- Identity of the employment business
- Rate of pay
- Pay intervals
- Statutory deductions
- Non-statutory deductions
- Any fees for goods or services, or other benefits
- Leave entitlement
The facts do not have to fully reflect precise figures but must clearly reflect the minimum amount that a worker could expect to receive. Statutory deductions can be listed as a deduction that will be made, but non-statutory deduction or fees must either state the amounts to be deducted or an explanation of how they will be calculated.
The agency can include supplementary information within the KID but only in relation to the contract and pay, such as details of the notice period and a commitment to pay the worker, even if the agency is not paid by the client.
The KID must include a representative worked example statement. The figures used on that statement may be estimated, but they must demonstrate in a realistic way how deductions are taken from the proposed pay and how this affects the net pay of the worker.
Intermediary or umbrella company relationship
The employment business must provide the KID even where the worker is being paid via an umbrella company or intermediary. The employment business must gather the information required from the intermediary/umbrella. Where the intermediary or umbrella company changes a revised KID must be issued.
The agency worker can ask to see what information the employment business has relied upon from the umbrella company, and the agency must provide it to the worker within five days.
In addition to the list provided above for an agency worker relationship, the following facts must be provided within the KID when an intermediary/umbrella is involved:
- Name of intermediary or umbrella company
- Who will employ the worker
- Who will pay the worker
- Any business connection between the employment business and umbrella/intermediary
- Supplementary information
- Representative example statement
Intermediary/umbrella company information:
- Rate of pay to the intermediary/umbrella
- Statutory deductions from the intermediary/umbrella
- Non-statutory deductions from the intermediary/umbrella
Worker pay information:
- Expected or minimum rate of pay to individual
- Any other differences between the umbrella company’s income and the worker’s net pay
- Any other benefits
- Any Regulation 32 opt-out agreement
It is clear that there is a substantial amount of information needed for the KID and processes must be updated to ensure the accurate and timely transfer for information between the intermediary/umbrella and agency.
Personal service companies
Individuals who engage with an agency through a PSC must also be provided with a KID before agreeing on terms. The aim is to provide clarity to both the PSC and the agency worker. If the PSC is the ‘work-seeker’ in this instance, any deductions made by the agency will need to be shown.
Disappointingly, the guidance omits the detail and example provided for the other types of employment agreements and avoids any mention of the new off-payroll working rules.
Record keeping and enforcement
The requirement to demonstrate compliance with the KID obligations adds to the already extensive record-keeping obligations for employment businesses. All such records must be maintained for a minimum of 12 months since work-finding services last occurred.
The Employment Agency Standards Inspectorate (EAS) will be responsible for enforcing compliance with the KID regulations and the EAS contact details must be displayed on each KID.