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In this guide, we’ll cover:
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What a tronc system is and how it works,
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How the new legislation affects hospitality businesses,
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The options available for setting up a tronc,
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Practical steps to stay compliant and efficient.
What is tronc?
In the UK, a tronc refers to the system used to pool and distribute tips among employees. The tronc system is usually set up to ensure that all staff members, including those who may not typically receive tips directly, are compensated fairly.
Tronc systems are usually adopted by restaurants, bars, hotels and other hospitality businesses and also ensure compliance with National Insurance requirements.
For many workers, tips are a major benefit of working in hospitality. By implementing a tronc scheme, businesses can:
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Distribute tips fairly and legally
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Give staff confidence they are receiving the correct amounts
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Reduce the risk of payroll or tax errors
Under the Employment (Allocation of Tips) Act, which took effect on 1 October 2024, tips are now categorised as either:
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Employer-received tips – for example, card payments processed by the business,
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Worker-received tips – typically cash given directly to staff.
Any tronc system should clearly set out how both types of tips are handled within the business to ensure compliance and transparency.
What is the new legislation regarding tips?
The Employment (Allocation of Tips) Act which came into force on 1 October 2024, changed the way UK hospitality businesses handle tips, gratuities and service charges.
The law requires:
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100% of tips to be paid to staff in full with no deductions allowed,
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Payment must be distributed to staff no later than the end of the following month after the customer leaves the tip,
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Employers must maintain clear tipping records and give staff the right to request them,
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Employers to publish and communicate a tipping policy that is fair and transparent.
Importantly, employers cannot use tips to “top up” wages to meet minimum wage requirements.
The legislation also gives employees the right to take cases to a tribunal if tips are unfairly withheld or mismanaged, meaning hospitality operators are now under closer scrutiny than ever.
What kind of tronc scheme do I need?
There are a few options when it comes to setting up a tronc scheme that business operators should consider carefully to find the right solution for them.
Here are some of the most common ways businesses set up their tronc scheme:
1. In-house tronc scheme
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Managed internally, often with digital tools
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One or more Troncmaster(s) appointed for the management and distribution of tips to employees
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Under the legislation, the business (not the Troncmaster) is legally responsible for compliance
2. Third-party tronc scheme
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Outsourced to an external provider
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Offers expert compliance management and reduces admin
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Comes with added costs
3. Hybrid tronc scheme
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Combines in-house control with external expertise
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Works well if you already have strong rota/payroll systems but want independent oversight from a Troncmaster.
No matter which method businesses opt for, it’s important to ensure the tronc scheme is fair and transparent, and that your team members are aware of how tips are collected and distributed. And it’s also essential that your scheme complies with all legal requirements regarding the distribution of tips and gratuities.
How is tronc calculated?
So, how can employers calculate tronc fairly for their employees? Let’s look at some of the most popular ways:
1. Points-based system: A points-based system allows employers to award points to employees based on factors such as hours worked, job role and customer feedback which are then used to determine the percentage of tronc that each team member receives.
2. Equal distribution: This is when the tronc is divided equally among all employees, regardless of job role or hours worked. This ensures that all employees receive an equal share of the tips but may not take into account differences in job responsibilities or performance.
3. Tiered system: This is when the tronc is divided into different tiers based on job role or level of responsibility. Employees in higher-tier roles may receive a larger share of the tronc, reflecting their greater level of responsibility and skill.
4. Performance-based system: This is when the tronc is distributed based on individual performance, such as customer feedback or sales targets. This method can help to incentivise employees to provide excellent service and rewards those who perform well.
Regardless of the method chosen, it should be fair to all employees with clear rules and guidelines that are readily available to view for all members of staff, including temporary and agency staff. The chosen system should be reviewed and updated regularly to ensure it remains fair and appropriate.
Benefits of a tronc system
A tronc system is one of the best ways to ensure your business is distributing tips fairly among all employees, based on clear guidelines – and a third-party system can take a lot of the time and stress out of for you.
Here are some of the other business benefits of having a tronc system in place:
1. Increased transparency: A tronc system can provide greater transparency around tips, allowing employees to see how much they are earning and how tips are being distributed. This can help to build trust between employees and employers, meaning your employees will be happier to work for you – and likely stay with you longer too.
2. Compliance with legal requirements: A tronc system can help hospitality operators comply with the Employment (Allocation of Tips) Act, now in force across the UK. This reduces the risk of legal disputes and reputational damage.
3. Improved efficiency: A tronc system can automate many of the administrative tasks associated with collecting, distributing and reporting on tips. This can help to reduce the administrative burden on hospitality operators and improve efficiency.
4. Improved financial management: A tronc system can provide greater control and visibility over tips, allowing hospitality operators to better manage their finances and make informed decisions about staffing levels and other business operations as well as save on NI contributions.
7 top tips for setting up a tronc system
As providers of hospitality HR, payroll and rota software, here are our expert tips for setting up a compliant and effective tronc scheme:
1. Choose a Troncmaster
One of the first decisions you will need to make is who will be responsible for managing your tronc system. This person is known as the Troncmaster. You can choose to assign this role to an employee or hire a third-party provider. There are pros and cons to both approaches. Assigning an employee can save costs, but they may not have the necessary skills or experience to manage the system effectively. On the other hand, a third-party provider can offer expertise and experience, but at a higher cost. Ultimately, you will need to choose the option that works best for your business.
2. Create a tips and troncs policy document
To ensure that your tronc scheme is fair and transparent, it is important to create a tips and troncs policy document. This should include guidelines for collecting, distributing, and reporting on tips, as well as any fees or deductions. Make sure that all employees are aware of this document and can refer to it as needed.
3. Involve employees
Tips are a significant benefit of working in the hospitality industry and many workers come to rely on them as part of their income, so their input absolutely matters when it comes down to deciding what’s fair. Listen to your teams and consider their opinions, especially from the front of house teams whose service has the most impact on tips. Remember that if staff perceive tips to be unfairly distributed, you may well see a negative impact on customer service as they feel demotivated.
4. Keep accurate records
The new legislation will give your teams the right to request information from their employers regarding the total tips collected and their allocation in regard to themselves. Although there isn’t specific guidance on how far back your records should go, our experts recommended keeping records for at least three years.
5. Check your current rota software
Your current rota software may be able to help you calculate tronc fairly. Many software solutions offer tronc calculation features, which can help you distribute tips more accurately and efficiently. Check with your software provider to see if this is an option for your business.
6. Check compliance with legislation
Finally, it is important to check that your tronc system is compliant with current and upcoming legislation. This includes the Employment (Allocation of Tips) Bill, which will require employers to ensure that all tips are paid to workers in full. Make sure that your tronc system is set up to comply with this legislation, and that you are keeping accurate records of all tips collected and distributed.
7. Fair Dispute Resolution Mechanism
Establish a fair and transparent process for resolving disputes related to tip distribution. Ensure that employees have a mechanism for raising concerns and that these are addressed promptly and fairly.
How Access can help you with fair tip distribution and tronc schemes
In this article, we’ve looked at what tronc is, how it’s calculated, the benefits for businesses and employees, and practical steps for setting up your own scheme.
A well-designed tronc system ensures tips are distributed fairly, staff are motivated, and your business stays compliant with the Employment (Allocation of Tips) Act.
At Access Hospitality, we provide payroll and scheduling software designed specifically for the sector, helping operators manage tips and tronc with ease.
Our tronc management solution allows you to:
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Automate the collection and distribution of tips
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Set your own tronc periods (weekly or monthly)
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Ensure compliance with the Employment (Allocation of Tips) Act
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Provide real-time reporting and analytics
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Create a clear, transparent tips and troncs policy for your staff
Whether you’re planning to handle tronc in-house or would like third-party provider support, Access Hospitality has the solution for you.
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Talk to the team today to find out more about our Access People solutions.
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Or check out our Tips and Tronc Legislation Q&A from our recent webinar with leading sector experts.
