The Hidden Risks in Tronc Management: Why TiPJAR Refuses to Play in the Grey

The purpose of the new law is simple: to make sure tips go to the people who earn them, and that they’re distributed fairly and transparently.

The Code of Practice that sits alongside the Act couldn’t be clearer:

“Where tips are left for a particular place of business, they should be distributed only among workers at that place of business.”

That principle underpins everything TiPJAR stands for. Once you start diverting or fixing tronc allocations – whether that’s paying head office, guaranteeing fixed amounts, or paying staff who aren’t at work – you’re no longer distributing fairly.

Because for someone to receive more, it means someone else must receive less.

1. Holiday tronc

Some have suggested paying tronc to people while they’re on holiday, based on the Big Table Group tribunal case.

But that case didn’t say tronc should be paid during holiday; it said holiday pay calculations should reflect average tronc earnings, if you’re paying tronc via the same bank account and PAYE as wages.

That’s a payroll function, not a tronc distribution rule.

Some have also argued that it’s right to pay tronc whilst on holiday to smooth out the earnings over the year, a reasonable explanation but it can encourage team members to take the busiest days or weeks off because they earn the tronc for those busy periods, and you’re then taking tronc away from those that have worked their socks off to look after your guests. It also begs the question on how you manage maternity, paternity, adoption, doggy adoption, sickness, parental leave or any other format of leave.

Paying tronc to people not working at the site breaks the fundamental fairness test in the Code of Practice, and risks taking earnings away from the people who actually served the guests.

The code of practice also references the intentionality of the customer, and if you ask any general consumer that has no ties to the industry they would not expect tips to be paid to someone that is sunning themselves on the beaches in Spain or Italy – they expect these tips to go those that have genuinely impacted on the service they have received.

2. Guaranteed or fixed tronc

Fixing tronc – for example, guaranteeing £2 per hour to every server – might sound simple, but it undermines the very definition of a tronc.

A genuine tronc must be variable, based on actual service and contributions, decided independently, and distributed from a shared pot earned by the team.

If a business fixes or guarantees tronc payments, the question must be asked “who decided these roles get these fixed amounts?” – it inevitably shows employer influence, which is exactly what HMRC uses to determine NIC liability.

So not only does it fail the fairness test, but it could also mean an employee would lose their 8% NI tax break and could lead to an Employer NIC bill of 15% on all tronc payments, with potential claims dating back for up to 6 years for the business.

3. Head office tronc

Including head office or support centre staff in tronc may feel like a goodwill gesture, but it fails the most basic rule of all: only those working in the place where tips are collected should benefit.

We’ve seen a number of people confused by the wording in the legislation – but the simplest statement is in the Guidance Notes that accompanied the act:

“An employer may choose to allocate amounts paid at non-public places of business between workers at the non-public place of business and workers at one or more of the employer’s public places of business, provided that this is done fairly.”

The intention here appears to be that if a head office happens to process a payment for (say) an event booked in a site which includes a tip, it might be fair for some head office team members to share in that – for example the event manager who has been providing service to the customer booking the event – and to share some with the site that will then host the event.  As long as it’s fair.

This does not mean you can do the opposite: take tips away from public facing places of business and pay them into non-public facing places of business.  That is not allowed at all. Tips must be allocated between workers at the place of business where the payment was made or to which the payment is attributable.

The non-statutory guidance makes it even more clear when it states:

“The code of practice makes clear that all workers involved in directly providing service to customers should be considered in the distribution of tips. The application of this principle varies depending on the specific circumstances of the industry and employer, and the employer must determine which jobs should be included, and justify this in their policy.

Jessica is employed as a marketing manager for a group of restaurants. Jessica usually works in an office within one of the sites but does not interact with customers during service. It would likely not be permitted for Jessica to receive a share of tips collected by the restaurants, as she is not directly providing service to customers.”

When head office receives tronc, you’re effectively taking money generated by teams at site and redistributing it to people who didn’t directly provide the service experience.

Beyond being unfair, this creates clear risk:

• It could be seen as employer-led allocation, triggering NIC liability.
• It may also be challenged as non-compliant under the Act, since those individuals didn’t contribute to the tronc pool’s earnings.

4. Dark Kitchens

Yes, believe it or not some operators and independent troncmasters have decided that it is “fair” to distribute tips and tronc generated at sit down restaurants, with the teams that are based at delivery only kitchens. Not Central Production Kitchens that there could be reason to suggest they have impacted on service by making it more efficient for kitchen teams during service.

The clause some are using is 27E(1)(a) qualifying tips, gratuities and service charges are paid at, or are otherwise attributable to, a non-public place of business of an employer (the “non-public tips”)”

The intention of the act is that tips should only be distributable at a non-public facing place of business if the tips are either paid there (ie. dark kitchen) or “otherwise attributable to” that place. With “attributable to” meaning because the people there “directly provided service” i,e. cooked the food the customer ate, served them food or drinks.

Once again when delivery only kitchen teams receives tronc from other sites, you’re effectively taking money generated by teams that have generated the tronc and redistributing it to people who didn’t contribute to the service experience.

Beyond being unfair, this creates clear risk:

• It could be seen as employer-led allocation, triggering NIC liability.
• It may also be challenged as non-compliant under the Act, since those individuals didn’t contribute to the tronc pool’s earnings.