Workers' Watchdog to probe Key Information Documents

The government’s new Workers’ Watchdog -- hailed as the first step to regulating umbrella companies, will begin by sniffing around Key Information Documents.

Although still without a specific date for its unleashing, the watchdog will scrutinise whether the April 2020 requirement to provide the document to agency workers has been met.

Given KID has been ignored by some, the watchdog (or the ‘Single Enforcement Body’) will likely impose “some juicy fines,” on the inadvertently and deliberately non-compliant.

'What was the point?'

Former tax inspector Carolyn Walsh, who yesterday issued this set of predictions on how and where the watchdog will operate, says misunderstanding about KID still pervades.

“[Agencies wrongly] believe the pay reconciliation statement provided by their umbrella company is sufficient to meet their own responsibilities,” begins Walsh, now boss of CWC Solutions.

“But what was the point of the very specific April 2020 amendment to the Conduct Regs if the existing way was alright?

“In any case, even if the pay reconciliation statement appears to comply with the rules, a Key Information Document must be given to the worker before an employment offer -- so not as part of the umbrella company registration process.”

'Single Enforcement Body in its infancy'

The specificity over where the watchdog will probe will come as news to associate solicitor Hannah Morrison, as she spoke yesterday of the SEB still being “in its infancy”.

“And the government itself has admitted that this is a ‘complex’ project to deliver which will require the introduction of new legislation,” she said, positioning the watchdog as off in the long grass.

A lawyer at Brabners LLP, Morrison enforced: “With the Director of Labour Market Enforcement role remaining vacant, and until we know the scope of the new enforcement watchdog’s powers -- including whether it will have sufficient teeth to really crack down on non-compliant employers, it remains to be seen whether the government will really deliver on its intention to meaningfully support the most vulnerable workers in the supply chain.”


Another legal advisory to contractors, Chartergates, sees the government’s urgency around the watchdog similarly, describing it as “keen” to set it up.

“As it stands, the Single Enforcement Body will be set up through primary legislation [albeit only] ‘when parliamentary time allows’,” the advisory said, quoting the government’s wording on launch day last month.

When it does eventually launch, the SEB should “absolutely” be staffed up by individuals who understand how the labour market works and how it can be exploited,’ says Clarity Umbrella’s Lucy Smith, echoing reported recommendations that industry professionals should be included in the watchdog’s ranks.  

'No softly softly, like there is on IR35'

But former umbrella or agency bosses on the inside of the SEB won’t lighten its touch when enforcing against brollies or recruiters who break HMRC or BEIS rules, Walsh suggested.

A qualified chartered accountant as well as an umbrella owner, she warned: “Unlike IR35 reform, there have been no promises made by the government of a ‘softly, softly’ approach to non-compliance”.

Trying to get firms on the front foot before the watchdog emerges, Chartergates advised: “We would recommend that businesses review their working practices and ensure that they are compliant in all areas, particularly those to be covered by the remit of the new body.”

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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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