The IR35 reforms are flavour of the month but are you prepared for KIDs next year?
If they haven’t already, many recruitment agencies will be waking up to the private sector IR35 reforms next year and beginning to plot the next few months ahead. In addition, there is a regulation due in April 2020 which is largely going under the radar – Key Information Documents (KID) for agency workers.
From April 2020, all agency workers must be given a Key Information Document before agreeing terms with a new recruitment business. This written statement will outline key pay related information and is intended to provide more transparency for the agency worker.
The regulation won’t apply for existing agency workers, only those registering and agreeing terms with a new recruitment business. There is therefore ample time to explore the regulation and make sure the recruitment business is prepared!
The key points of the KID
These KIDs are intended to give agency workers several pay related facts and details about their engagement, prior to registering with a new recruitment business. They should be able to see how deductions and fees affect their pay through the supply chain. Some important points include:
· The recruitment business is responsible for issuing the KID
· Must not exceed a two page A4 document
· Must include representative examples of all deductions to a worker’s pay (real number must be used but these don’t have to represent the worker’s specific assignment)
· A different type of KID must be issued depending on the type of engagement (the KID for an umbrella company would look different to that of a limited company engagement)
· A revised KID must be issued each time the facts reflected in the document change; for instance if a worker changes umbrella company, a new KID will need to be issued
· If multiple engagement methods may be available when the worker registers with the recruitment business, it may be good practice to have a key facts page covering all payment methods, with the specific KID issued once a final choice has been made
What should you do now?
Firstly, don’t panic! There is still over 4 months until this regulation takes effect – remember it’s only for new workers agreeing terms with the recruitment business, not existing workers. It is always wise to start as soon as possible though; there will be enough to do in relation to IR35 at the start of next year. Here's what you should be thinking about now:
· Engage with your recruitment software provider. What steps are they taking to provide a solution? If you already upload assignments, have payment information on, then they may have a useful update coming soon
· Speak to Clipper Contracting; we’re putting things in place that may assist recruitment businesses that don’t have another option through their software suppliers
· Begin gathering information from your umbrella companies; you’ll need to know the models they use, the margins they retain and how they calculate the worker’s pay. You’ll have to evidence how the payments work so ensure the umbrellas you are using are compliant!
For more information, feel free to call your key contact at Clipper Contracting Group on 01305 233170.