EAS View on Statutory Rate Increases and Revised KIDs

EAS has received a few queries on NMW increase and revised Key Information Documents (KID) last week so thought it worthwhile to share their view with trade bodies.

Please read below for the EAS view:

“Paragraph 15 of Regulation 13(A) requires revised KIDs to be given to work-seekers when the details required to be included in the KID change.  We have been asked whether the annual increase in NMW/NLW rates requires EBs to issue revised KIDs reflecting the change?

EAS view:

If the KID that has been issued to a work-seeker states in words “at least the National Minimum Wage or National Living Wage” or words to that effect, then, in our view, there will not be a requirement to reissue the KID when the NMW/NLW rates increase each year. The figures in the example pay statement need only be reasonably estimated, not exact actual figures, so we don’t consider the example pay statement showing the rate that was correct at the time of issue to necessitate a requirement for a new KID to be sent.  The section of the KID that sets out the expected or minimum rate of pay would still be true when the rates increase so in our view there would not be a requirement for EBs to reissue revised KIDs to all their workers.  However, we do recommend that the example pay statements of new KIDs that are to be issued to new work-seekers from April are amended to reflect the new rate.

If the KID did not include this wording (or similar) and simply states, the expected or minimum rate of pay as a figure (e.g. £9.50 per hour) then the KIDs, in our view, would need to be reissued to reflect the change.  The facts given in the KID would no longer be true.  The revised KID would need to be issued no later than the fifth business day following the change and state the date on or after which the revisions take effect.

We don’t expect statutory rate annual increases to require KIDs to be revised and reissued each year.  Statutory deductions may be stated on the KID without an amount or method of calculation and the example pay statement requires only reasonably estimated figures. We received some queries last year relating to the uplift in National Insurance and the planned Health & Social Care Levy that would have ringfenced this uplift from April 2023.  These were eventually scrapped by then chancellor Kwasi Kwarteng, and the rate uplift was reversed in November 2022. We advised that EBs wouldn’t need to reissue KIDs to reflect the uplift in the example pay statements of KIDs but when the new deduction was to come in then all KIDs would need to be reissued showing the new deduction.

So essentially, if the only change is to the amounts of the figures in the example pay statement but the rest of the KID remains accurate a revised KID does not need to be issued, in our view.”

If you have any questions, please do not hesitate to get in touch with the EAS.