UPDATED JANUARY 2024
With the new tip distribution laws, troncs ensure staff get the money they’re owed without them or the employer paying unnecessary National Insurance. But not all tip allocation schemes are the same… and your employees might not consider them equal, either.
Your tronc needs a set of rules, and it’s up to your Troncmaster to decide what that looks like; when they do their initial research, they will soon discover there’s a surprising amount of leeway.
Done right, this leeway can ensure your tronc scheme is well-calibrated to your business and the team it employs. Done wrong, many staff could run for the exit – and straight to a competitor with a more fitting setup.
So, let’s take a look at the differences between the leading tronc distribution options and understand the benefits each one brings.
Keeping your tronc scheme simple
To begin, let’s start by examining some of the simpler tronc schemes:
The “even shares” tronc system
This is a rare but not unheard-of approach to establishing a tronc. All staff share evenly any tips, gratuities or voluntary service charges, irrespective of their hours.
The result is that anyone taking sick days or a well-earned holiday will not see their income suffer from a lack of tips. But the disproportionate winners in this setup are part-time employees, who will get the same share for doing less than their colleagues.
The “contracted hours” tronc scheme
If you want to remove the “part-timer problem”, you could always set up a system around contracted hours. That way, the tips allocation is nicely smoothed over during holidays or when people are ill, but part-timers don’t get the same as their full-time co-workers.
An “actual hours” tronc
The “actual hours” method has proven the most popular in the hospitality industry. This only rewards staff for their hours worked rather than what they are contracted to do. So, if you have an unexpected absence or take time off for any other reason, you won’t get tips for that period.
Where troncs need more complexity
In business, we’re always told to keep things simple; but with troncs, that isn’t always a good idea. How, for instance, do you recognise more experienced staff who work the same hours as their teammates? Furthermore, how do you recognise seniority or years of commitment?
To tackle this need for nuance, let’s look at some fine-tuned tronc options.
The “direct tip” tronc scheme
Tips recognise the excellent service someone has delivered for a customer. One way to honour the intent of your patrons is through direct tip weighting. In this setup, when someone gets tipped directly, they keep a good amount of that money, and then the remainder goes into a pool to be shared.
Departments/group pooling your tronc
A quick question for you now: if your business has different teams, should they get the same share of the total tips?
It’s a discussion that pops up with businesses that have multiple facilities, such as a hotel, as well as establishments that want to distinguish between front-of-house and back-of-house staff. Either way, this setup gives you the opportunity to divide the larger tips pot proportionately and in a set way each pay period, with different percentages of the pooled tips allocated to specific teams.
Seniority, pay or length of service
Larger businesses often have a clear hierarchy, and so accordingly, the more senior people often will want a larger share of the tips. In a seniority-stratified tronc, a Head Waiter may receive a greater share of the tips than a Kitchen Porter.
A tronc can also be calculated based on salary. A word of caution, though: basic maths means that anyone can work out what earnings other staff members get if they know the tips they received.
Of course, a tronc share doesn’t just have to be about seniority or wages – it can be about how long an employee has been a part of the team. You can set up your tronc to ensure longstanding staff get a better cut of the money based on greater contribution to the customer experience.
Distributing tronc points
How can you bring some of these different types of tronc together?
The answer is through a points system.
Here, based on a set of predefined criteria – like the different schemes above – each staff member gets points, and their share of tips will be based on that.
This creates a lot of freedom. The Troncmaster can even set their own benchmarks for staff to qualify for points if they like.
Tronc reserves
A tronc reserve was a way for an agreed proportion of the tips collected to be set aside for a rainy day, a tough time, a special occasion, or to cushion some of the off-peak periods.
The Allocation of Tips legislation makes this practice illegal from July 2024 as it states that all monies collected as tips, service charges and gratuities must be paid to eligible staff by the end of the month after the month they were collected. So tips collected in January must be paid out to staff by the end of February.
Getting a Tronc scheme right (and getting it wrong)
As a troncmaster, DO make sure you:
- Ensure you set out the tronc scheme clearly, saying who gets what and establishing the day-to-day administration. This can come in the form of a tronc constitution, which defines every likely scenario for tip distribution, including absences.
- Bring staff members on board as the tronc scheme is being established – it’s better to get feedback early rather than when it’s up and running… and too late.
- Have accurate records of tronc transactions. It’s one thing to set out rules, but it’s also essential to demonstrate to regulators that you have stuck by them.
- Keep track of the tax laws – amounts and exclusions valid one year could change the next.
DON’T:
- Use tips to pad out wages, especially to reach the living or minimum wage – that’s illegal.
- Get too involved if you have hire-and-fire power: a tronc is meant to be overseen by someone independent of hiring responsibilities
- Use the tronc setup to favour or exclude staff without a very good reason – anyone who does this recklessly is breaching the rules of a fair tronc.
Lost? Let us help you find the way
With so much choice, you have our sympathies; this dazzling array of tronc options makes it easier to either miss something or find the wrong allocation has been chosen for your staff. For your in-house Troncmaster, it’s a lot to take on, as they juggle these responsibilities with looking after your customers.
Chances are you need some specialised help from outside.
Speak to Troncmasters now to find out how we can make troncs trouble-free, potentially save you money and make life better for your staff.