Contractor sector handed Key Information Document templates

Contractor umbrella companies are dusting off downloadable templates of what their Key Information Documents for their agency-using contractors will look like from April 2020.

A glance online shows the brollies have had the documents broadly outlined ever since they were first tabled by the Good Work Plan in February 2018, but new BEIS guidance means that they can now be finalised.

Yet ‘KIDs’ will actually need to be issued by recruitment companies (the umbrellas are drawing them up for them firstly). And umbrella users won’t be the only contractors who receive them.

'Next to IR35 reform'

“It's an important change which will need to be managed alongside the off-payroll IR35 Reform changes next year,” says the FCSA, addressing agencies with PSC contractors on their books.

FCSA’s CEO Julia Kermode added: “It is agencies' responsibility to produce the information, and the supply chain (e.g. umbrellas) will need to work together to produce the information.”

Kermode has pointed out that the relevant clause in the ‘Conduct Regs’ does not require KIDs to be produced for every agency contract, only once at sign-up before agreeing contractual terms. 

'Change KIDs, when the key information changes'

Yet should the ‘key information’ (including pay, deductions and type of contract) change at any point during the assignment, the document must be reissued, says Clarity Umbrella.

“This may include things like student loans and changes once right to equal treatment under AWR 2010 takes effect,” added Clarity’s managing director Lucy Smith.

The new official guidance confirms: “Revised key information documents only have to be issued when the facts that are reflected in the document change

“This could be the introduction of a new deduction, a change in pay intervals or frequency, or a change of the intermediary or umbrella company paying the agency worker. A change in assignment pay in itself may not necessitate a new key information document”.

'Opt-out'

Alongside the 25-page guidance, business officials released downloadable, amendable templates of KIDs for PAYE workers, umbrella company workers and PSC/limited company workers.

The latter PDF reminds that while KIDs are part of a Conduct Regs update, Personal Service Company contractors can still opt-out of those regs (in writing, by both the PSC and the worker).

But whereas the opt-out has let agencies save on their administration and red tape burdens, the paperwork trail with KIDs reads as difficult to minimise.

'Enforcement'

In a section on ‘enforcement’ and ‘record-keeping,’ the business department advises: “From 6th April 2020, employment businesses will…have to keep records demonstrating that finalised and any revised key information documents have been given to agency workers.

“Neither workers nor the employment business have to physically sign the ‘key facts’ page: a saved email demonstrating they have sent the final key facts page to the worker would suffice.

“As with other records required to be maintained by EAS [Employment Agency Standards inspectorate], this evidence would have to be retained for a minimum of 12 months since work-finding services last occurred.”

'Relevant, up-to-date'

The guidance adds that agencies will also have to “demonstrate” that the details contained with KIDs are “as correct as possible and, where relevant, up to date.”

BEIS then concludes with a sort of warning: “This might mean, for example, saving any communication with the relevant intermediary or umbrella company about their deductions and margins. From an enforcement perspective, EAS will look to ensure that agency workers have received a correct and accurate key information document.”

Clarity Umbrella and Liquid Friday are among the umbrella companies providing their staffing agencies with Key Information Documents for use with, and issuing to, their contractors.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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