Distributing pooled tips fairly among staff is essential under the UK’s new tipping law, and now that the Employment (Allocation of Tips) Act 2023 is fully in force (as of 1 October 2024), every hospitality business must ensure tips are passed on to staff in full and on time.
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 Evo users love how we simplify the whole process.
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 under the new law.
A tronc is a system used to manage the distribution of tips and gratuities to employees, commonly in hospitality businesses such as restaurants, bars, and hotels.
With the introduction of the Employment (Allocation of Tips) Act, tronc systems have become more important than ever. They help ensure that all tips are distributed fairly and transparently among employees, while also keeping businesses compliant with record-keeping and reporting duties.
If a tronc is set up correctly and run independently, it can also reduce the need to pay employer National Insurance Contributions (NICs) on tip income, as tips are taxed instead through PAYE (Pay As You Earn).
Using a tronc scheme helps businesses:
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 Evo, we can provide expert guidance on appointing an independent troncmaster and streamline the process through our partnership with TiPJAR, making sure your business remains compliant with HMRC guidelines.
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.
According to UK law, tronc payments don’t count toward the National Minimum Wage or National Living Wage. This ensures employees’ base pay remains distinct from any additional earnings they receive via tips.
Note that under the 2025 holiday-pay tribunal ruling, tronc earnings paid through the employer’s payroll may now need to be included in statutory holiday pay calculations. Independent tronc systems, however, remain exempt from this risk.
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, 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.
If you work in hospitality, you’ve most likely heard about the Employment (Allocation of Tips) Act, and as of 1 October 2024, it’s officially in force. The Act has changed how UK hospitality businesses handle tips, gratuities and service charges, and it’s designed to make things fairer and more transparent for everyone.
So, what does it mean in practice?
The law also defines a “qualifying tip” as any tip or service charge the employer receives or has significant influence over, whether that’s paid by card, cash, or through an app.
If tips aren’t handled fairly, employees now have the right to take their case to a tribunal. That means operators are under more scrutiny than ever and having a compliant tronc system in place isn’t just best practice, but it’s essential.
A tronc scheme offers multiple benefits to both employers and employees. Here are some key ones to consider.
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.
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.
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.
A well-structured tronc scheme helps you stay compliant with the 2024 Tipping Act and 2025 Statutory Code, making sure employees receive their rightful share of tips without risk of legal issues or fines.
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 headaches.
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:
“At TiPJAR, compliance and fairness have always been at the heart of what we do. Our integration with Rotaready Evo means operators can now automate tronc management directly from their rota, removing admin, improving accuracy, and ensuring every penny goes where it should.
By operating through an independent tronc master, our customers stay fully compliant with the Employment (Allocation of Tips) Act, remain exempt from NICs, and avoid any confusion with wages. It’s a model built on independence, transparency, and trust, exactly what the industry needs.”
Dan Hawkie, CCO TiPJAR
Get in touch and let Rotaready and TiPJAR help you streamline tip management, stay compliant and focus on growing your business.
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:
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 or employer-received tips (such as card payments), 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 Evo can help you implement a tronc scheme that works for your business.
21 July 2025
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