Everything You Need to Know about Tronc

Distributing pooled tips fairly among staff is essential under the UK’s new tripping law, but when you’re running a busy venue, it’s easy to get confused and overwhelmed with what should be going where. Having a system in place can help with this, and Rotaready users love how we simplify the whole process. 

Tronc originates from the French phrase “tronc des pauvres,” meaning “collection boxes for the poor” in the 1920s. But today, it’s all about keeping your business compliant. In this article, we’ll be covering everything you need to know about tronc – from what it actually is, its benefits, and how a tronc scheme can help your business stay on track when it comes to managing tips.  

What is tronc?

A tronc is a system used to manage the distribution of tips and gratuities to employees, commonly in the hospitality industry, such as restaurants, bars, and hotels. With the introduction of the Employment (Allocation of Tips) Act, a tronc system helps ensure a fair distribution of tips among employees and can also reduce the need to pay National Insurance Contributions (NICs) on tips, as these are instead taxed through the PAYE (Pay As You Earn) income tax system.

Why use a tronc scheme? 

• Using a tronc scheme helps businesses stay compliant with tax obligations and with the fair allocation of tips under the Employment (Allocation of Tips) Act. 
• It offers a fair and transparent way to distribute tips among employees. 
• Employers and employees benefit from cost savings through reduction of NICs.

What is a troncmaster?

A troncmaster refers to the person who is responsible for managing and distributing tips through a tronc scheme. Typically, they are an independent third party, separate from the business, as this makes sure everything stays completely imperial and fair.

The role of a troncmaster is to help businesses stay compliant with regulations while removing the administrative burden. Here at Rotaready, we can provide expert guidance on appointing an independent troncmaster, simplifying the process further and making sure your business remains compliant with HMRC guidelines.

Is tronc included in salary?

The short answer is no, tronc payments are separate from an employee’s salary. These payments represent tips that are pooled and distributed among staff through the tronc scheme.

To clarify, according to UK law, tronc tips do not count toward the National Minimum Wage or National Living Wage. Therefore, they can’t be included in the basic salary calculation, as this makes sure that employees’ base wages remain distinct from any additional earnings they receive via tips.

Do you pay tax on tronc?

Yes, tips distributed through a tronc are subject to tax but can be exempt from National Insurance payments. 

By implementing a well-structured tronc scheme, you allow staff to receive their tips with tax deducted before payment, but without incurring NI contributions. This saves both the business and its employees money on NI tax, all whilst ensuring the correct taxation of tips. It’s essential that the tronc is set up in accordance with HMRC guidelines so you can get the most out of these benefits.

What are the benefits of a tronc scheme?

A tronc scheme offers multiple benefits to both employers and employees. Here are some key ones to consider: 

• It promotes transparency and fairness: By having a process in place for distributing tips, with clear records of how much each employee receives, you build trust within teams and ensure everyone benefits from customer tips.

• It saves your staff money on National Insurance: Employers save on National Insurance Contributions (NICs) as tronc payments are exempt from these. This can result in significant financial savings for the business. Employees also benefit by saving on NICs, allowing them to take home more of their earned tips, boosting job satisfaction and morale.

• It will boost staff morale and retention: A fair and transparent system motivates employees, making them feel valued. This can lead to better staff retention and improved team morale, as workers are directly rewarded for their efforts.

• It keeps you compliant: A well-structured tronc scheme helps you stay compliant with the new UK tipping laws, making sure employees receive their rightful share of tips without risk of legal issues or fines.

• It streamlines your tip management process: A tronc scheme simplifies the often complicated task of tip distribution, especially if you have a high staff turnover or multiple locations. With clear procedures in place, you can reduce your administrative headache.

Simple Tronc Management with Rotaready and TiPJAR

In this article, we’ve looked at what a tronc scheme is and how your business can benefit from one. But if starting a tronc scheme sounds a little daunting, Rotaready is here to help. Through our partnership with TiPJAR, we take the hassle out of sharing and distributing tronc and cash tips.

Our seamless integration automates tasks, such as onboarding new staff onto the TiPJAR platform and distributing tips based on hours worked or point systems tied to job roles. This makes it easy for businesses to split tips daily, keeping your teams motivated during busier shifts.

Discover the benefits of our integrated solution:

• Reduce manual work through automatic data sharing between Rotaready, TiPJAR and your EPOS.
• A customisable and scalable system that adapts to your business needs.
• 100% compliance with the latest legislation.
• Improved staff recruitment and retention by fostering trust and transparency in tip distribution.
• Options for daily or weekly tronc calculations, ensuring flexibility in how tips are shared.

Get in touch and let Rotaready and TiPJAR help you streamline tip management, stay compliant and focus on growing your business. 

Tronc scheme FAQs

We know that all of this can be a lot to digest, so we’ve compiled some handy FAQs to help you clarify further what you need to consider where tronc is concerned:

Who can be a troncmaster?

A troncmaster must be someone outside the senior management or hiring teams, ensuring an independent approach to tip distribution.

How much Is saved with a tronc scheme?

A tronc scheme saves businesses 13.8% on Employer’s National Insurance, while employees can save up to 12% on their own NI contributions.

What kind of tips are included in a tronc scheme?

A tronc scheme applies to pooled tips, but not to tips directly given to individual employees.

Do I have to use a tronc scheme?

While not mandatory, a tronc scheme provides significant benefits, such as tax savings and ensuring fair tip distribution. Rotaready can help you implement a tronc scheme that works for your business.