The various solutions used by employers in the hospitality industry for distribution of tips can be anything but transparent. When employers do pass gratuities on to their staff, they commonly do so in such a way that the extra is treated and taxed as salary, meaning employees receive it net of Income Tax and National Insurance Contributions (NICs). Enter an alternative option that benefits everyone: troncmaster schemes.
What is a tronc?
It’s a special pay arrangement used to distribute tips, gratuities and discretionary service charges given by customers to staff.
What does tronc mean?
It derives from the French “tronc des pauvres”, or poor box. These were once used to accept donations for those in need.
What is a troncmaster?
A person responsible for arrangements to share tips, gratuities and discretionary service charges between staff.
How do troncmaster schemes work?
By assigning a troncmaster, employers and employees stand to benefit. For example, the need to pay NICs on tips is completely removed.
Although it is possible to assign an employee as a troncmaster, it is not a simple process, so an independent one is often appointed to manage the tronc.
In 2017, the Association of Licensed Multiple Retailers and the Unite union formally agreed a code to promote good tipping practices. Since then, the media have featured an alarming number of reports over the treatment of gratuities by well-known restaurant chains.
Thankfully, however, it is not all doom and gloom. As independent troncmasters, we have witnessed an increase in businesses actively looking for a solution that allows for the fair and transparent pooling and distribution of tips, service charges and gratuities.
Businesses in the hospitality industry approach us with myriad challenges.
Most commonly, they fall in to one of the following three scenarios:
- They already operate a tronc scheme, but find it too much of an administrative burden.
- For peace of mind, they need a health check on their practices to confirm that they are unbiased and compliant with the rules.
- Yet-to-be-launched restaurants, pubs and bars, hotels and conference venues want to start off on the right foot, with a tronc scheme already in place.
Whatever the situation, businesses choose Buzzacott’s Troncmaster team because we guarantee industry standards. Here’s how we helped Obia, a bustling restaurant in South London, to set up its tronc scheme and how it benefited its staff.
When Nikul, the owner of Obia, approached us in 2017, the restaurant had recently opened. During this time, they had been receiving tips but were unsure how best to fairly and ethically distribute them to staff because, put simply, they were not sure of the best way to do it.
There are rules around the correct operation and distribution of tips. If a tipping scheme is set up incorrectly, not only could you lose your best staff due to lack of motivation, but you could fall foul of HM Revenue & Customs and face a potential NIC liability of up to six years. Some restaurants place the responsibility of a tronc on their general manager, but Nikul knew of the administrative burdens that this would carry and so wanted someone independent to take on the responsibility. That’s when we stepped in.
As with any case, it is our mission to ensure that all our tronc schemes are equal and beneficial for all involved. We tailor our schemes to the business and staff, so to gain a better understanding of what was needed, we met Obia’s management and employees to create an arrangement that was mutually beneficial. We designed a bespoke tronc scheme that was genuinely independent, free from employer interference or influence, and run for the benefit of the Obia staff. We always tell our clients that giving as much as possible back to staff goes a long way, not only in keeping staff happy but also in building a trusted business.
Angelika, a waitress at Obia, said: “As a working mum, I depend on tips to help support my family. With more customers paying tips through service charge and on cards, I rely on those then being passed on to me.” Understanding the worth of tips for businesses and staff is important to the work we do – we try to get businesses to understand that there is more to tronc schemes than saving money on NICs.
"Prior to joining the Obia team, I have seen troncs operated by internal management rather than an external and independent troncmaster. Having worked with Buzzacott for some time now, I believe that having someone independent acting as the troncmaster adds value. For example, it has removed any concerns that I have seen in past that some staff members are unfairly favoured more than others."
Paolo Saba – Head Chef
Since we began working with Obia, the management have received positive feedback from staff on the transparency of the scheme and how it is run. In turn, Nikul and the management have seen an improvement in staff motivation and retention. They have since opened another restaurant, and we’re proud to say we’ve designed a tronc scheme for it, too.
It is easy to assume that the gratuities you are giving are going to the right people, but unfortunately that is not always the case. With Buzzacott’s Troncmaster team distributing the gratuities, you can be sure that we are acting fairly and ethically, free of bias, favouritism and personal friendships or motivations.