Holiday Pay, tips and tronc – the reality for people teams in 2025

Because the noise around holiday pay and tronc has become deafening.
Every week People teams and operators have been asking the same question – are we exposed, and what should we actually do?

Between LinkedIn lawyers, payroll providers, and clickbait headlines, the waters have got pretty murky. So we decided to bring some calm to the chaos. We hosted a webinar bringing together three sharp perspectives:

• Katie Linstead – Head of Services & Compliance at Grateful
• Richie Branson – Employment Law Specialist at Fieldfisher
• Charlie Barnes – Employment Legal Director at RSM

Over 100 people joined to unpack the Palanki v Big Table Group tribunal case, understand what it really means, and get clear on the sensible steps to take next.

What actually happened in the case. At its core, a Big Table employee claimed:

• unpaid holiday pay, and
• unauthorised deductions from wages.

The central issue – should service charge and tronc payments count towards average weekly pay when calculating holiday pay? The tribunal examined:

• How the tronc operated – in this case, managed internally by the GM and paid through normal payroll.
• What the contract said – it stated that tips “will be shared”, not “may be shared”.
• Who owned or controlled the money – HMRC hadn’t been told about an independent troncmaster or separate PAYE.

The judge decided that because the contract implied a right to those payments, and because the tronc was run inside payroll, the amounts counted as normal remuneration. The result – the claimant won £5,444, plus an uplift for poor process.
The case is going to appeal, but for now it stands as persuasive precedent (not binding, but influential).

Why this matters

• Even though it’s only one tribunal case, it changes the risk landscape for hospitality operators.
• If your tronc setup looks anything like Big Table’s – internal troncmaster, same PAYE, or any contract or advert that suggests guaranteed tips – you could face similar arguments.

And the timing couldn’t be more relevant. The Fair Work Agency launches in April 2026, chaired by Matthew Taylor, bringing new enforcement power across minimum wage and holiday pay. That means more scrutiny, longer lookbacks, and more focus on fairness.

What you should do right now

(1) Make your tronc genuinely independent – appoint an external troncmaster with their own bank account.

• • Consider a separate PAYE for tronc payments (allow about 3 months for HMRC setup).
  • Notify HMRC and keep every letter, call note and reference number.
  • Record employee votes and consultation on how the tronc is run.

If the setup looks employer-controlled, it risks being treated as part of normal pay.

(2) Clean up your contracts and job adverts

• Remove any mention of tronc or tips being “shared”.
• Add an entire agreement clause to stop earlier promises being relied on.
• Keep your tronc details in a non-contractual policy instead.
• Align your recruiter and onboarding scripts so there are no off-the-cuff commitments.

This avoids the situation where a tribunal could decide tips are a contractual right.

(3) Decide how to handle holiday pay and tronc
There are two practical routes:

• Include holiday hours in tronc allocations by employee vote – this often avoids the argument that someone is worse off financially when on leave.
• Exclude holiday hours, but make sure your Average Weekly Earnings method fairly reflects variable pay.

Whichever you choose, agree it properly, document it, and roll it out at the start of your new holiday year.

(4) Keep policy and practice separate

• Employer explains why changes are happening.
• The troncmaster leads the how and handles staff consultation.
• Keep a clear audit pack with policy versions, consultation notes, allocation sheets, HMRC letters and payslip evidence.

If you claim independence, be able to prove it.

(5) Prepare for audits and new regulation
The Fair Work Agency will have power to audit back six years from 2026. Be ready to show:

• tronc bank statements and transfers
• PAYE records
• policy documents and meeting minutes
• clear governance showing staff consultation

If an auditor can’t understand your setup in ten minutes, it needs tightening.

The bigger picture. This is about getting ahead. The direction is towards greater transparency and employee voice. Tribunals are looking more closely at how tips and tronc are handled in practice, not just what’s written on paper.And regulators are gearing up to make examples of poor practice once the Fair Work Agency goes live.

So take the time now to make your tronc watertight.
Not because you’re at fault – but because it’s smart risk management and shows your business runs on integrity, not improvisation.

Suppose you’d like to get more practical guidance or a free review of your current setup.

In that case, you can book time directly with Matt, Mason or Katie from the Grateful team – they’re offering open advice sessions for operators who just want clarity, no sales pitch. 👉 Book here