Since April 2020, all recruitment agencies have been required to furnish applicants with a Key Information Document (KID) before they sign up. Here we explain what this requirement involves, what contractors should look out for, and how the KID fits into today’s IR35 and umbrella supply chains.
Background
The requirement to provide a KID to agency workers is covered by regulation 13A of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Conduct Regulations).
From 6 April 2020, all agency workers must be given a KID before agreeing terms with an employment business.
The aim is simple: To give clear information on how workers will be paid and what will be deducted from their earnings.
You can access the official guidance here, which includes example templates for PAYE, umbrella and limited company workers.
We asked leading umbrella expert Lucy Smith from Clarity Umbrella, how this requirement affects contractors in practice.
What do contractors have to do?
The agency must provide the KID before you sign any contracts. It should show the engagement options on offer, typically:
- Agency PAYE
- Umbrella PAYE
- Limited company (PSC) outside IR35
- Limited company (PSC) inside IR35
This helps you see how each route differs in terms of pay and deductions.
How will this protect umbrella contractors from unscrupulous operators?
A full breakdown of deductions is required. If anything is being disguised as loans or unexplained charges, you should be able to spot it quickly. It also forces agencies to scrutinise how an umbrella proposes to operate.
What is promised and what actually happens can still differ, but the KID makes vague figures harder to hide.
What about limited company contractors? Will they get a KID too?
Yes. Contractors who use an agency must be provided with pay information. What is shown depends on the route:
- Agency to umbrella to contractor. Gross contract rate shown. Employment costs are taken from the contract rate before the umbrella calculates taxable salary.
- Agency to PSC (outside IR35). Gross contract rate shown. The PSC is responsible for deducting costs and taxes.
- Agency to PSC (inside IR35). Usually a net salary figure is shown, as the agency is deemed to cover employment costs before paying the contractor.
There are many pathways, but these examples show how figures can be presented as gross or net depending on the model.
What if I was already working for an agency when this rule came in?
Workers already engaged before April 2020 were not issued a KID automatically. If you change assignments with the same agency, or move to a new agency, a KID must be issued before you start the new role.
2025 context. How KIDs fit into IR35 and today’s supply chains
The off-payroll working rules now apply across the public sector and most private sector engagements.
That shift has pushed more contractors into umbrella payroll or agency PAYE. The KID sits at the start of that chain.
It should make clear who is paying you, what sits between you and the end client, and which deductions appear before your taxable pay is calculated.
In practice, many umbrellas operate compliantly and payslips tie back to the KID.
Problems arise when the document is generic or when key items, such as employment costs, holiday pay treatment, or any fees, are not clearly explained. Treat the KID as a baseline.
Check that your first payslip lines up with what you were told at sign-up.
What to check in your KID before you accept
- Who pays you? Agency or umbrella. The legal employer name should be clear.
- Rate translation. If an uplifted umbrella rate is quoted, does the KID show how this becomes gross taxable pay after employment costs.
- All deductions. Employer NIC, apprenticeship levy, holiday pay method, any admin fees. Nothing should be vague.
- Holiday pay. Accrued or rolled up. If rolled up, is it clearly stated and included in the rate.
- Expenses. Whether any are reimbursed and how they are taxed.
- Benefits. Any benefits or extras that affect take home pay.
If the KID does not match your first payslip
Raise it with the agency and the umbrella immediately. Ask for a corrected KID or a written explanation. If figures still do not reconcile, you can seek independent advice and consider reporting concerns to the Employment Agency Standards inspectorate.
Good practice in 2025
- Keep everything. Save the KID, assignment schedule, and offer emails. Store them with your first few payslips.
- Cross check. Compare the KID to your first payslip. Look for the same employer name, the same method for holiday pay, and the same list of deductions.
- Use official checklists. HMRC’s guidance for umbrella workers explains what should appear on a payslip and the red flags to watch for.
- Ask for updates. If your terms change, ask the agency to reissue the KID so it reflects the new arrangement.
Will KIDs alone stop non-compliant models?
KIDs improve transparency, but they do not replace due diligence. They show how things should work. The real test is on your payslip and in the contract chain. If higher than expected deductions or unusual arrangements appear, query them early.
Useful links
- KID guidance for employment businesses
- KID guidance for workers paid via umbrellas
- Check your payslip if you use an umbrella
- Employment Agency Standards inspectorate
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