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How troncs are helping hotels recruit and retain talent

With staffing shortages being one of the biggest challenges hoteliers face right now, staff retention has never been more important. Here, Samantha McCarthy shares how introducing a tronc scheme can help your hotel recruit and retain talent.

We typically see hotels share tips, gratuities, and voluntary service charges (tips) through the main payroll, which means they’re taxed as salary and staff receive them net of income tax and employees National Insurance Contributions (NICs). By doing so, hotels are required to pay employers NICs to pass these tips onto staff leading to increased costs.

In some circumstances, we also see hotels use the tips collected to cover the employers NICs costs, meaning the total pool of tips available to share among staff is less. This significantly reduces staff take home pay, which lends itself to poor morale and low retention, as staff search for higher paid positions elsewhere. So how can a tronc help?

About the author

Samantha McCarthy

+44 (0)20 7556 1227
mccarthys@buzzacott.co.uk
LinkedIn

We typically see hotels share tips, gratuities, and voluntary service charges (tips) through the main payroll, which means they’re taxed as salary and staff receive them net of income tax and employees National Insurance Contributions (NICs). By doing so, hotels are required to pay employers NICs to pass these tips onto staff leading to increased costs.

In some circumstances, we also see hotels use the tips collected to cover the employers NICs costs, meaning the total pool of tips available to share among staff is less. This significantly reduces staff take home pay, which lends itself to poor morale and low retention, as staff search for higher paid positions elsewhere. So how can a tronc help?

How does a tronc work?

How does a tronc work?

By sharing discretionary tips through a tronc scheme where all qualifying conditions are met, tips are exempt from employers and employees NICs. Given that employer and employee NICs total over 25%, this represents significant savings for both the employer and staff. See our diagram below showing life before vs after a tronc.

Tronc-diagram

Having a tronc can be a real competitive advantage over other hotels when it comes to recruitment and retaining staff. In addition to staff taking home more, using an independent troncmaster gives staff the peace of mind that there will be no influence by the employer when sharing tips, thereby removing the possibility of bias or favouritism. This in turn makes staff feel valued and improves morale across the business, often leading to increased staff retention and better service provided to customers.

Case study

Case study: How Buzzacott helped a leading hotel chain

We were recently approached by a leading hotel chain, who were looking to improve their tipping practices and better reward and motivate their staff. They had been receiving tips but were paying them via their payroll. 

We met with both management and employees to create an arrangement that was mutually beneficial, introducing key performance indicators in the tronc that would reward staff for hitting targets. This tailored tronc, run for the benefit of staff, has in turn led to the tips being utilised fully and increased staff take home. The hotel has also seen an improvement in retaining staff and attracting new joiners.

Introducing a tronc has given us the platform to use Service Charge so much more effectively for our business. By rewarding the right people at the right times and giving our employees extra confidence in the transparency and security of the tronc, we have better engagement and can target more productivity from our teams which in turn generates rewards for all. The professional knowledge and confidence Buzzacott brings to the Troncmaster service has been fantastic.
Client - People & Development Director

Legal requirement

Legal requirement?

This year, it’s expected that the government will introduce the Employment (Allocation of tips) Bill, which will make it a legal requirement for hotels to pass on the full amount of tips paid by customers to staff. This means that businesses will not be able to deduct fees from tips collected and will be required to follow a Statutory Code of Practice.

At Buzzacott, we already champion the allocation of tips to staff through tailored tronc systems that are fair, ethical, and protect our clients from any challenges from HMRC. We can help you prepare to meet the requirements and will guide you through any challenges that may arise with the proposed new legislation.

Get in touch
Get in touch

Call us today on +44 (0)20 7710 3389 or email buzzacotttroncmaster@buzzacott.co.uk. Alternatively, fill in the form below and a member of our team will be in touch.

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