The new Employment (Allocation of Tips) Act will make it unlawful for employers to withhold tips and service charges from staff. Amongst other rules, it will ensure that all businesses that take tips have a fair and transparent method of distributing said funds to employees no later than the end of the month after they have been received. The legislation is due to come into effect on the 1st of July 2024. More information can be found here.

This is very much a subjective question and can only be answered by the people who know the business best. If a business is unsure on how to allocate tips, gratuities and service charges, it is a great idea to put this to a vote and allow the team to have their say in how things are allocated. This not only ensures that you are working towards something that the majority of people think is right/fair, it also gives the team a voice to have their say. Involving the team in initiatives like this can help people feel valued and encourage them to stay within a business. We appreciate that this can be a daunting task for businesses that have multiple locations so get in touch to find out how Grtfl can help streamline that process as well.

A Tronc is a special pay arrangement used to distribute tips, gratuities and service charges. A Tronc system is set up to ensure all staff members, including those who may not typically receive tips (such as back-of-house, and non-customer-facing members), get their fair share. Tronc systems are common in a wide range of hospitality businesses such as restaurants, bars, hotels, cafés and more. The agreement also introduces advantageous benefits such as National Insurance exemptions for the business, and the team.

No, when Grateful operates as Tronc master, 100% of the monies are distributed to the employees. Grateful makes money by charging a flat fee to the business based on a per site, or per-user model. That cost covers the software, employee app, comms and more. It is important to know the difference between our Tronc, and cashless Tipping platform. In the separate part of the FAQs, you can see how our cashless Tipping platform works and what the differences are to Tronc, mainly around the responsibility for declaring earnings to HMRC.

As a result of operating a Tronc scheme, all tips collected and allocated/distributed via a Tronc are exempt from NI. This means that when Tronc is operated correctly, and the National Insurance exemptions are met, in line with HMRC’s guidance, the business can save 13.8% on employers’ national insurance, and the team members can save 8% of employees NI, this is subject to change in coming months but there is still a considerable saving to be had for both employees and employers when Tronc is done correctly. This is without even considering the saving on labour costs for Grateful automating Tronc processes.

This is a question we get asked frequently. Tronc as a scheme, (regardless of whether it’s in-house or outsourced) is a great way for businesses to be compliant with the upcoming legislation, whilst saving on national insurance costs and having a standardised process to distribute tips, service charges and gratuities that is fair. The benefits of a Tronc system are not unique to Grtfl so the benefit of NI savings (if done properly) would be realised, where the Tronc is owned by an internal team member, via Grtfl, or with another provider. Historically, the role of a Tronc master is taken on by a firm of accountants, or incumbent accounting provider for the hospitality business. Here are 3 main benefits of having an outsourced Tronc with Grtfl:

• Transparency: Taking Tronc back to its ‘bare bones’, it’s a tip for employees and ultimately should be treated as a motivator for teams, in a fast-becoming cashless society with one payment, at the end of the month and no transparency, the industry risks service charge and tronc income as being faceless, and a ‘given’ regardless of performance. Grtfl Tronc gives employees 100% transparency on their earnings on a daily, or weekly basis. This not only increases the motivation, and engagement of team members it can also act as a retention tool long term. By implementing people-first initiatives and being proactive about team engagement, Grtfl Tronc can help businesses, to attract, and retain great talent.
• Automation: Grtfl Tronc, utilises technology as an enabler for automation. By setting up integrations with your Epos, PMS, Rota, HR, and payroll systems, the technology does all the heavy lifting and allows businesses to have a truely hand-off approach to Tronc. Furthermore, this reduces the risk of human error which is a real threat when operating Tronc internally.
• Impartial: Grtfl Tronc reduces the risk of employees questioning the efficacy and fairness of a Tronc system that is controlled internally by their colleagues. Grtfl Tronc enables businesses, and employees to have complete visibility of the written Tronc policy, the overall earnings for the site, in which an individual is working, and their own earnings. By doing so, ensures that the calculations are done on objective data rather than subjective calculations for an internal team member.

Generally speaking, if you are a business that takes tips on a regular basis, Tronc is definitely a viable option worth looking into. If nothing else, the national insurance savings could mean that even with the cost of the Grtfl software, and Tronc services, the business could be in a positive ROI due to savings on NI, and labour costs for calculating earnings. Furthermore, it’s an opportunity to give your employees transparency on their earnings that they wouldn’t have had before. If you want to check out how much National Insurance your business could save, check out our Tronc calculator on our Tronc page, and one of the Grtfl team will give you a call back if required.

Absolutely, Tronc can be operated by any business that is taking tips, and pooling them between the team. Tronc is most popular with hospitality businesses because of the frequency of tips, and the number of people that are contributing to the overall experience for the customer. Whereas in a hair salon, (usually) you have 1, maybe 2 people that are contributing to your treatment so tip pooling is less common. However, the recent changes in legislation, specifically the part stating that employees working within the same place of business now have the right to receive their share of tips, might mean that it’s difficult to distribute tips to people without some automation.

Yes, a Tronc is a special pay arrangement used to distribute tips, gratuities and service charges. Whether a business has an optional service charge, or a tip on the card machine, a Tronc can be operated. One thing to note is that when operating a service charge model, it MUST be optional and clearly stated as being optional to the guests, giving them the option to take it off the bill should they want to.

Tip pooling is the simple act of splitting tips between people at a place of business, with no formal arrangement, or agreement whereas a Tronc is a special pay arrangement used to distribute tips, gratuities and service charges. Tips, gratuities, and service charges paid or allocated via a Tronc may mean that they are exempt from National Insurance contributions (NICs). Legislation states that any amount paid to an employee which is “the payment of a gratuity” or “in respect of a gratuity” is exempt from NIC’s if:

• It is not paid directly or indirectly to the employee by the employer and does not comprise or represent monies previously paid to an employer;
• It is not allocated directly or indirectly to the employee by the employer.

Therefore, the difference would be that if you operate a Tronc in line with the government legislation the business, and employees can benefit from exemptions on NIC’s.

Yes, please get in touch and one of the team will be able to share how we operate, and how we can help you, and your business.

Yes, you can operate a Tronc on one PAYE reference. As stated in government guidance, as long as the business is not responsible directly or indirectly for the allocation of funds, a business can operate a Tronc. Operating on one PAYE, would only be possible if the Tronc master is only advising on allocation. If the arrangement is that the Tronc master pays out directly, then a separate reference would be needed.

No, this is illegal.

No, Grateful ensures that 100% of Tronc monies collected are allocated to the team. Grateful makes money by charging a flat fee to the business for the services. This covers the cost of the app, comms to the team, and more.

Yes, people can opt-out from being paid Tronc. As long as everyone has the opportunity to be a part of the Tronc, in line with what is ‘fair’ – that’s the important part.

Grateful automates Tronc by integrating the software into existing systems for hospitality and service businesses. The most common way that this happens is by integrating into an existing Epos, rota and scheduling, HR, PMS and payroll platform. This allows the business to have a hands-off approach, and reduce the risk of human error.

Through the platform team members can see and track their own earnings throughout a pay period, and they can also access a written and approved Tronc policy. Along with the overall tips, gratuities and service charge is collected within the place of business they are working. It is important to note that team members cannot see Peer 2 Peer earning. The platform is designed to give individuals the transparency that they need over their own earnings, and the confidence in the Tronc operation.