Since April 2020, each new candidate must be supplied with a Key Information Document outlining the details of their engagement, including how they are engaged and an estimate of their take home pay. Despite this being a legal requirement for years now, many contractors do not receive this document before they commit to the contract, which is what the legislation requires.
Aside from the pressing need to comply with the law, we think KIDs represent a chance to solve some of the most common issues recruiters face in managing their contractors, and we wouldn’t want you to miss this opportunity.
What is the problem that KIDs could solve?
Umbrella company employment is a very straightforward way for your contractors to be employed, but there are some common misunderstandings, particularly among inexperienced contractors. Where the contractor is not clear on the details before they commit, you can find yourself managing unnecessary complaints.
Common misunderstandings include:
- The contractor was given the contract rate as their pay rate, and now believes they are paying the umbrella company margin and employment costs.
- The contractor was not aware that they would be employed by the umbrella company. This could lead to them missing out on employment benefits, like sick pay, and to confusion about references, payslips and pension auto-enrolment.
This kind of confusion can create a large volume of work for you, as well as impacting your contractors’ experience and hurting your retention rates. A single document that sets out the details of the engagement, along with a pay illustration and estimate of take-home pay, can head off this kind of complaint before it starts, and leave you with happier contractors whose expectations have been met.
In order to achieve this, the KID has to be presented to the contractor at the right time, (before they commit to the contract) and it has to be given sufficient importance.
New contractors receive a lot of information when they start a new contract, so it’s important to draw attention to the KID and check their understanding to avoid future problems.
What needs to go on a KID?
Here’s a quick overview of what kind of information Key Information Documents should contain:
Payroll Facts:
- The name of the worker (optional)
- Contract type (Contract of Service, Contract for services, etc…)
- The minimum rate of pay the worker can expect
- Pay Frequency
- A list of Statutory Deductions (Income Tax, NIC, Student Loans etc)
- A list of Non-Statutory Deductions (Private Healthcare, etc)
- Any Fees for goods, services or any other benefits
- Information about the leave entitlement
Example statement:
- A breakdown of all employment costs (for Umbrella Companies Only)
- Any employee deductions
- Any fees for goods and services
- An Example of net take-home Pay
How we can help
Regardless of how your contractors are engaged a KID still needs to be supplied, but if your contractors are employed by Fair Pay Services we can help. We’re familiar with the regulations and we can supply all the necessary information, and even create the document itself if required.
If you have questions or if we can help in any way, please call our expert team on 01604 360222 or email [email protected].
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