New agency workers entitled to key information

From 6 April 2020, employment agencies will be required to provide new agency workers with a document known as a ‘key information document’ prior to them starting any work or being given any contract.

This new requirement is another of the changes being introduced as a consequence of the Matthew Taylor Review of modern employment. The Review identified transparency of information, particularly around pay, fees and deductions, as a big issue for agency workers.

The new obligations are set out in regulation 13A of the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019. This amendment ensures that anyone using the services of a recruitment agency to find work will receive a document that sets out clearly certain key information regarding their relationship. 

The key information document is intended to help agency workers make informed decisions about whether to take on the work. 

What is in the document?

The document which must be identified in the heading as the ‘Key Information Document’ and must include the following details:

It is also required to show a ‘representative example statement’ which will illustrate the remuneration the person looking for work could expect to receive. 

It will need to be taken into account that it may be that the ‘person’ seeking work could be a company or other legal entity which then directly or indirectly provides the individual to the hirer. 

Where agencies use an umbrella company they must obtain the specific elements such as the wage or salary that will be paid by the umbrella company to the individual. They must also show the fee or margin that the umbrella company will charge together with any employee benefits that will be offered to the worker. 

The agency will have to list out all these charges/ items and most importantly they will no longer be able to offer an ‘umbrella rate’ also known as an assignment rate without first providing these details. This is because that rate may not be the remuneration that the agency worker will actually be paid as the final figure will have to take into account employers NIC and the umbrella’s own cut. 

Where the agency is to engage with a Personal Service Company or PSC on an ‘inside IR35’ basis the agency must issue the key information document before any contracts are entered into and provide the net sum that will be payable after PAYE deductions. 

Guidance from the Government 

Guidance has been released on GOV.UK, to help employment agencies understand what is required in order to meet the new requirements. 

There are also templates that have been published by the Department for Business, Energy & Industrial Strategy and Employment Agency Standards Inspectorate. This provide examples of the Key Information Documents required for PAYE agency workers; agency workers paid via an umbrella company  and those agency workers who provide their services via a PSC.

The Employment Agency Standards inspectorate will enforce the new requirement.

If that was not enough new documentation on 6 April 2020 there are also important changes regarding the rules around written statements. New agency workers whether classed as employees or ‘workers’ will have the statutory entitlement to receive a written statement of employment particulars in addition to the key information document.