Key Information Document: How is your take-home pay calculated?

Are you a contractor in the United Kingdom and are you struggling to understand how your take-home pay is calculated? If so, reading this article is a must.

The law becomes stricter from 6 April 2020 onwards. Most contractors, recruiters and end hirers are currently worrying about the implications of the changes to the off-payroll working rules (IR35) in the private sector but the supply chain appears to be less familiar with the launch of the so-called Key Information Document which is implemented as part of the ‘Good Work Plan’. [1]

By virtue of the new clause 13A of the Conduct of Employment Agencies and Employment Business Regulations 2003 (the ‘Conduct Regulations’), recruitment businesses need to be clearer on how your take home pay is determined and the conditions that apply when you go ahead with your assignment.

David Korthals, Salt’s Head of Compliance & Contractor Management, has dipped his toes into this somewhat overlooked piece of legislation and will provide you with an answer to the key questions.

What is a Key Information Document?

Recruiters and contractors usually agree a pay rate without factoring in possible deductions and this sometimes ends up in unnecessary surprises once payment hits your (company) bank account. The Key Information Document is intended to improve transparency of information for contractors, particularly around pay. It will give you immediate access to key pay related information before agreeing terms with the recruitment business and a clear idea of how any fees and deductions will affect your pay.[2]

When will Salt provide you with a Key Information Document?

From 6 April 2020, we will provide the Key Information Document prior to the start of your assignment, irrespective of whether you work through your own limited company (if your assignment is outside IR35) or one of our approved umbrella companies (if an inside IR35 determination is made).  This will be provided by our Compliance & Contracts Team (contract@welovesalt.com).

What information will be included?

As stated above, the Key Information Document outlines who will pay you, when you will be paid (weekly or monthly) and gives you more detail on which deductions and benefits apply.

Examples of statutory reductions are income tax or national insurance contributions, but you could also think of the umbrella margin, the amount being dependant on the umbrella company of your choice. Examples of employment benefits are holiday pay, well-being packages or shopping discounts.

More information can be found here.

Is all the information in the Key Information Document correct?

You should not regard the Key Information Document as a contractual arrangement, it is designed to give you a rough overview of how your take home pay is calculated and the figures in the document may not completely represent what you may be taking home. Nonetheless, it should provide you with a better understanding of how your agreed pay rate is affected by fees and deductions throughout the supply chain. If you have more detailed questions about your take home pay, please let us know.

How long will Salt keep the data?

From 6 April 2020, Salt will have to keep records demonstrating that finalised or revised Key Information Documents have been given to you and we will need to keep evidence on file for a minimum of 12 months since work-finding services last occurred.

Who monitors compliance with the new rules?

The Employment Agency Standards (EAS) oversees compliance with this new regulation.

EAS can be contacted at eas@beis.gov.uk

Tel: 0207 215 5000

Address:
Employment Agency Standards Inspectorate
Department for business, Energy and Industrial Strategy
1 Victoria Street
London
SW1 0ET

Who can I contact if I need more info?

Please email contract@welovesalt.com and we will respond to your email as soon as we can.

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[1] PROVIDING A ‘KEY INFORMATION DOCUMENT’ FOR AGENCY WORKERS Guidance for employment businesses, p.5. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/865808/key-information-document-for-agency-workers-business-employer-guidance.pdf

[2] Idem. page 5.

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