Navigating the 2025 Budget: What Hospitality Businesses Need to Know

Business

TiPJAR - Ben thomas - ceo

The recent UK budget announcement for 2025 brought both challenges and opportunities for businesses in hospitality. With a rise in the National Minimum Wage, an increase in employer National Insurance Contributions (NICs), and adjusted business rates, these changes will significantly impact the bottom line for pubs, bars, and restaurants across the country. 

As a sector already operating on tight margins, hospitality businesses now face the dual task of managing higher costs while keeping their doors open and teams motivated. Let’s dive into what these changes mean for the industry and explore how businesses can adapt to stay resilient. 

National Minimum Wage Increase: Supporting Your Team in Challenging Times

The budget announced a 6.7% increase in the National Minimum Wage, which will rise to £12.21 an hour from April 2025. 

While this increase reflects the importance of providing workers with a fair income in light of rising living costs, it also creates new pressures for hospitality businesses. Industry commentators estimate that the cost per FTE employee will rise by around £2,500 per annum. 

Labour costs already represent a substantial portion of a hospitality business’s expenses, so these changes will likely strain operational budgets even further. For employers, balancing this wage increase with a commitment to providing excellent guest experiences may require thoughtful adjustments, whether through menu pricing, operational efficiencies, or careful workforce planning. 

NICs Increase and Threshold Reduction: Managing the Added Costs

From April 2025, the threshold for employer NICs will be reduced by 45% to £5,000 per annum. In addition, employer NICs will increase by 1.2%, adding over £600 in additional NICs per employee for businesses. 

This adjustment impacts not only payroll expenses but also overall staffing strategies, making it even more vital for hospitality businesses to streamline operations. 

Some businesses may look into more flexible staffing models, while others may choose to invest in technology that supports efficiency or offsets administrative costs. Regardless of the approach, finding solutions to navigate these added expenses will be essential. 

Business Rates Relief: A Welcome Breathing Space

The budget’s 40% relief on business rates for hospitality and leisure businesses, capped at £110,000, comes as a welcome reprieve. This measure, effective from April 2025, provides some relief against rising operational costs. 

For businesses eligible for this support, the additional capital could go toward staff training, technology upgrades, or even renovations to enhance the guest experience. 

While this relief won’t fully offset other rising costs for many, it offers some breathing room, enabling businesses to reinvest in areas that could lead to long-term operational resilience. 

Alcohol Duty Reduction: Incentivizing In-Venue Spending

The 1.7% reduction in alcohol duty on draught products is perhaps intended to encourage more in-venue spending. However, as it brings draught prices down by only around 1p per pint, most operators feel this is unlikely to make a significant impact. 

That said, it may signal further incentives to encourage more foot traffic or prompt patrons to stay longer, increasing revenue per customer. 

In a sector where customer experience is key, even a small duty reduction is welcome as a positive change. 

Staying Resilient Through the Changes

The hospitality industry has been called upon constantly in recent years to show resilience and adaptability. So far, it has not been found wanting, and tribute must be paid to the operators and teams that ensure our restaurants, bars, cafes, pubs, and hotels continue to offer a warm welcome and brilliant experiences. 

The 2025 budget brings both pressure points and some support measures. The key to moving forward, as always, is to focus on sustainable, long-term practices that strengthen businesses. 

At TiPJAR, we’re here to support hospitality businesses by offering a digital tipping solution that makes tip distribution easy, transparent, and compliant. By helping businesses fairly reward their teams, TiPJAR provides a way to foster team satisfaction and retention even amid budget constraints. We believe that, with the right tools and strategies, hospitality businesses can adapt to these changes and continue to deliver the brilliant experiences that keep guests coming back! 

So, let’s keep that momentum going and tackle these shifts together, creating workplaces that stay strong, inspired, and well-equipped for the future! 

Reflecting On The First 7 Days Of The Fair Tips Act

Business

Yesterday, October 1st, 2024, marked a significant moment for everyone in the hospitality industry: the Employment Allocation of Tips Act officially came into effect. At TiPJAR, we’ve been passionate about fairness and transparency since day one, so seeing this legislation become a reality feels like a huge victory, not just for us but for all the hardworking staff out there who rely on tips.

Here’s what’s been going on at TiPJAR in the last 7 days and why we’re so excited about this change.

A Proud Moment for the Industry

When we started TiPJAR in 2019, we set out to solve one problem: making sure tips went directly to the people who earned them, with no funny business. We’ve always believed that staff should get 100% of their tips, and it’s incredibly rewarding to see this principle become law across the entire industry.

This new legislation means businesses can no longer pocket a portion of workers’ tips. It’s the kind of change that will make a real difference to the lives of so many people, and we’re proud to have been advocates for this shift from the beginning. We’ve been totally humbled by the entire country’s response to the change so far, and can’t wait to see how it affects our industry long-term.

Changes to Our Product Fees & a CAll To Action For Card COMPANIES

As part of this shift, we’ve made some changes to how some of our products work. One of our core values has always been ensuring TiPJAR is completely free for staff to use. To keep it that way, we’ve updated how fees are charged on some of our products. For example, with our Tap to Tip and PDQ solutions, we’re now making it mandatory for customers to cover transaction fees, rather than leaving it optional.

This means that when someone leaves a tip, 100% of it goes to the team, every time! It’s a small but important step in making sure everything is fair and transparent. And while these changes are new, they’ve been really well received by both staff and customers, which is a big win for everyone. You can see a breakdown of exactly how these fees are charged, by product here.

But here’s the thing—while we’ve found ways to make sure staff aren’t paying these fees, there’s a bigger issue at play. Card issuers, like Mastercard and Visa, still charge fees on tips, and we believe that needs to change. These fees don’t serve the staff, and they don’t reflect the purpose of a tip. After all, a tip is a reward for great service—it’s meant for the person who served you, not for financial intermediaries to take a slice.

We strongly believe that card issuers should reconsider and remove fees on tips. The industry has taken a massive step forward with this new law, but it would be even better if companies like Mastercard and Visa followed suit by waiving fees on these transactions. We’re committed to doing everything we can to drive those costs down, but a wider change in the system would make a huge difference to everyone in the hospitality industry.

Last-Minute Scramble by Some Operators

What’s surprised us the most over the past week is just how many businesses left their compliance to the last minute. While we’ve been working with operators for months to prepare for the new rules, many businesses only started scrambling to get ready in the final days before the deadline.

We’ve been taking on a lot of new clients, helping them get compliant quickly. It’s great to see businesses doing the right thing—even if they’re a bit late to the party—and we’re happy to help them get there! If you need some guidance on how to approach the legislation, feel free to get in touch!

Collaborating with the Government

One of the things we’re most proud of as a business is how closely we worked with the Department for Business and Trade (DBT) on the guidance for this legislation. Our CEO, Ben, was even quoted on the government’s official page about the new law, which was a fantastic moment for us as a team. You can read more about that here.

Being able to contribute to something so positive for the industry has been an incredibly rewarding experience for all of us at TiPJAR.

Staying True to Our Values

It’s no secret that some businesses are already trying to bend the rules of the new legislation. We’ve seen a few instances of troncmasters allowing several practices that clearly go against the spirit of the Act.

At TiPJAR, we’ve always put staff first, and that’s not going to change. We’ll continue to work closely with operators to ensure they’re compliant, but we’ll never compromise our core value of making sure tips go straight to the people who deserve them with total fairness and transparency.

A Huge Thanks for All the Support

We’ve been blown away by the warm reception we’ve received over the past few days. From new clients to media outlets, the response has been incredible. We were even featured on ITV News last night, which you can check out [here](https://www.itv.com/news/2024-10-01/where-will-your-tip-go-new-law-stops-businesses-pocketing-staff

We also want to take this opportunity to thank our partners, clients, and news outlets for amplifying our message of fairness and transparency. The support has been overwhelming, and we’re excited to continue playing our part in this industry transformation.


Looking Forward

The Employment Allocation of Tips Act is just the beginning of a more equitable tipping culture in the UK. At TiPJAR, we’re committed to staying at the forefront of this change, continually improving our products and ensuring that tipping remains a transparent, fair, and positive experience for everyone involved.

If you’re a business looking for help in staying compliant, we’re here to support you. Together, let’s create a better future for all workers.

The Employment (Allocation of Tips) Act is Here!

The Employment (Allocation of Tips) Act is Here!

Life beyond the tipping legislation: The exciting road ahead for hospitality
A Thought Leadership by Dan Hawkie, CCO of TiPJAR 

As of October 1st, it’s official: The Employment (Allocation of Tips) Act is now live! The changes in the new legislation are significant, aiming to bring much-needed transparency and fairness to how tips are distributed across the hospitality sector and other tipped industries. Throughout the development of this act, TiPJAR has been collaborating closely with the Department for Business and Trade, lending our expertise to help shape a framework that truly meets the needs of both workers and businesses.

For those looking for a deeper dive into the specifics, we’ve created a range of resources you can access here. But now that the Fair Tips Act is in effect, it’s not just about compliance; it’s about embracing this change and understanding the broader benefits it brings.

A win-win for businesses and employees alike

The new tipping legislation is not just a legal obligation but a powerful opportunity for operators to build stronger, more motivated teams. Yes, there are potential penalties for non-compliance, but let’s focus on the opportunities:

  • Guidance: For far too long, there hasn’t been a level playing field regarding how operators manage tips or tronc, which has meant those that are doing the right thing, haven’t always reaped the rewards in the same way as operators that may have mismanaged these funds. Undoubtedly there are contentious issues with the legislation but at least everyone now must follow the same rules, and those that look after their teams fairly will inevitably come out on top.
  • Better attraction and retention: Fair and transparent tipping practices are not just the law now, they can also be a powerful tool to attract, engage, and retain top talent.
  • Cost savings: With a legitimate tronc policy in place, employers don’t pay national insurance on tips, which could save your business thousands.
  • A more motivated team: By utilising technology, we have a much better opportunity to enhance our tronc policies to reward better performance. With service charge now being so widely used, it has unfortunately bred complacency in pockets of our sector, which has led to diminishing service levels. By rewarding team members appropriately for working busier shifts, providing better service and selling more, this is a great opportunity to stand out from your competition.

This is Just the Beginning…

The Fair Tips Act marks a significant shift, but there are still plenty of opportunities on the horizon. At TiPJAR, we’re excited to explore new ways to enhance the benefits of tipping for both employees and employers:

  • A ‘bank-like’ savings pot: Imagine a separate pot where employees can save their tips with interest—like a digital piggy bank.
  • A digital card: Making tips go further than ever before. A dedicated card for employees to spend their tips directly, with access to hundreds of high street discounts and cashback.
  • Financial education: We believe in empowering employees with financial knowledge, helping them gain greater financial freedom and security.

We’re fortunate to work in a brilliant industry where we hear heartwarming stories of the impact that tips can have on people’s lives.  Life beyond the legislation is an exciting place for both employers and employees, and TiPJAR will be there every step of the way to support.

So, embrace the change, explore the opportunities, and let’s work together to create a fairer, more transparent future for everyone in hospitality. Exciting times are ahead!

Millions to take home more cash as Tipping laws comes into force
Official Release from The Department for Business and Trade 

Laws to ensure workers keep all of their hard-earned tips comes into effect

Changes expected to boost wages by putting £200 million back in the pockets of workers

Comes ahead of employment rights bill which will go further to strengthen workers rights and make work pay

From today [Tuesday 1st October], millions of hard working and dedicated workers will benefit from new laws which will ensure they keep 100% of the money they have earned through tips.

Introduced through a Private Members’ Bill last year, the Employment (Allocation of Tips) Act and the statutory Code of Practice on fair and transparent distribution of tips came into force today. 

These changes will require employers to pass all tips, gratuities, and service charges on to workers, without deductions.

From today, if an employer breaks the law and retains tips, a worker will be able to bring a claim to an employment tribunal. 

Most employers already pass on tips to the staff who earn them; however these laws will crack down on the minority of businesses who continue unacceptable tipping practices.

Employers in the wrong could be made to pay fines or compensation to staff, with workers able to hold bosses fully accountable through employment tribunals.

The Department for Business and Trade estimates that today’s changes will mean around £200 million will be received by workers that would otherwise have been retained by these employers. 

It is hoped that this will build further trust between customers and businesses, as well as create a level playing field for all businesses through the fair and transparent distribution of tips across the board. 

Minister for Employment Rights Justin Madders said:  

“When you tip someone for good service, you expect them to keep all their tip. They did the work – they deserve the reward. 

“This is just the first step of many in protecting workers and placing them at the heart of our economy. We will be introducing further measures on tipping to ensure workers get their fair share of tips. 

“Britain’s outdated employment laws require an urgent update. This Government will ensure they are fit for the modern economy and deliver on our plan to Make Work Pay.” 

This government will go even further to strengthen workers rights through our Employment Rights Bill which will ensure workplace rights are fit for a modern economy, empower working people and drive economic growth. 

The legislation will be delivered in close partnership with business and civil society and will strike the right the balance between improving workers’ rights while supporting businesses across the country that pay people’s wages.

Andrew Tighe, Director of Strategy and Policy at the BBPA, said:  

“This new framework will introduce a level playing field for all businesses, ensuring that those who were not already passing on all tips to their staff will now be required to. 

“A greater a degree of consistency and transparency when dispersing tips will benefit both existing and new staff alike.  

“We would urge all operators to review the guidance and ensure their policies are compliant with the legislation.” 

Ben Thomas, CEO of TiPJAR, said: 

“Our hospitality and service industries are powered by a wonderfully diverse and exceptionally talented workforce. For the first time, these millions of workers can trust that tips employers collect on their behalf will always be passed to them. 

As a business providing a platform to get tips to workers quickly, fairly and transparently, we wholeheartedly welcome today’s announcement. We look forward to continuing our work with the DBT and government to develop further guidance as the principles of the legislation are put into practice, supporting businesses across the sector to operate to a consistent and equitable standard in handling tips.” 

 

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Save More, Spend Smarter

Business

TiPJAR Wins UK Smart Grant to Supercharge Revolutionary Spend & Save Product for Hospitality Workers 

The Fair Tip Act is just around the corner, and everyone is talking about it including the US election candidates! TiPJAR supports over 60,000 users and 12,000 operators to share fair and transparent tipping and help businesses reward and motivate their staff.

We’ve also got some huge news—TiPJAR has been handpicked by the UK government, out of thousands of applicants, to receive the UK Smart Grant! This isn’t just any grant; it’s the rocket fuel we need to launch our groundbreaking and pioneering Spend & Save product to tens of thousands of hospitality workers around the world.

So, what’s the big deal about Save & Spend? Glad you asked! It’s our latest and greatest invention that puts hospitality employees first, giving them limitless opportunities like never before. Here’s how it works:

Save: Employees can now hit the pause button on their tip payouts, whether they’re collected through QR codes, Tap to Tip machines, PDQs, or even via Supertronc. Instead of getting their tips right away, they can stash them in a savings pot and watch it grow—interest included! It’s like a piggy bank, but way cooler.

Spend: But wait, there’s more! When they’re ready to spend those hard-earned tips, they can do it with their very own TiPJAR card, and guess what? They’ll get cash-back at 1000s of high-street venues. Who wouldn’t want a slice of that action?

We weren’t kidding when we said we’re pioneering—nobody else is doing this! TiPJAR exists because tipping was broken, and we had the perfect fix. Now, with Save & Spend, we’re not just fixing it, we’re flipping it on its head and turning it into something incredible.

"TiPJAR has come so far in just 5 years, and I'm immensely proud of what we've achieved for tipped workers. With the launch of our 'Spend and Save' product, we're entering an exciting new phase. It's always been my vision for workers to maximize their tips, and this new feature is a crucial step in making that a reality."
james brown
James Brown
Co-founder - TiPJAR
"At Honest Burgers, we’re excited about TIPJAR’s new features that will directly benefit our teams. The ability to save tips within the app and earn interest has been a long-requested feature, and we’re thrilled it’s now becoming a reality. Additionally, the new TiPJAR card would allow our teams to spend their tips with ease and enjoy discounts at high street brands. These updates would provide greater financial flexibility and added value for our employees, further enhancing their experience with TIPJAR."
Tommy Giraux
Head of Projects - Honest Burger

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Fair Tips Talks – Episode 6: Reactions To The Final Code Of Practice

Fair Tips Talks

EPISODE 6

REACTIONS TO THE final CODE OF PRACTICE

Let’s dive deep into the  Final Code of Practice under the Fair Tips Act, which has been officially released by the Department of Business and Trade this afternoon (Monday 22nd April). Originally scheduled for implementation from July 1, 2024, the start date has now been shifted to October 1, which we imagine is designed to give operators additional time to prepare!

The changes in the new code are significant and aim to increase transparency and fairness in how tips are distributed not just within the hospitality sector but also in other tipped industries. Throughout the development of this code, TiPJAR has been working closely with the Department of Business and Trade. Our goal has been to lend our industry expertise to help shape a framework that addresses the needs of both workers and businesses effectively.

LISTEN ON SPOTIFY

Or watch on Youtube:

Highlights of the Final Code of Practice:

  • Clarification on Agency Workers: The updated legislation clarifies that for the purposes of tip allocation, the ’employer’ is regarded as the business that hires the agency worker. If tips are passed to Agencies for payment to workers, the Agency retains the obligation to ensure no deductions from tips (aside from income tax). This ensures that agency workers are treated equitably in line with directly employed staff concerning tip distribution.
  • Emphasis on Hours Worked: The code now includes hours worked during the period that tips were received as a factor to consider in businesses implementing a ‘fair’ distribution under the legislation.
  • Encouragement for Worker Consultation: The code strongly advises employers to engage with their workforce in developing tipping policies and reinforces that team members’ view of “fairness” will be a consideration.
  • Exclusion of Digital Direct Tips: Tips collected digitally, directly from customers to staff, are not considered employer-received tips and are out of scope, subject to correct operation of these platforms and relevant HMRC guidance.
  • Anti-Discrimination Safeguards: Strengthened provisions to prevent any form of discrimination in the distribution of tips, ensuring fairness for all employees regardless of background or characteristics.
  •  

Download our easy guide to the legislation

Dive deep into the intricacies of the imminent Fair Tips Act, and grasp what it signifies for hospitality enterprises in its evolving framework.

Enter your details to download our easy guide:

What is TiPJAR?

TiPJAR® is an award-winning cashless tipping and tronc platform that allows individuals and teams to receive cashless tips directly from customers, then distribute them transparently and fairly amongst the team.

We are a start-up on a global mission to help tipped workers in the emerging cashless society, to help businesses reward and motivate their best staff, and to help customers say thank you for great service.

Seamlessly Integrated into your workflows

The world’s only solution that effortlessly integrates into your existing payment flows for a streamlined tipping experience.

designed for enterprise

TiPJAR offers a comprehensive solution tailored to meet the unique needs of large-scale businesses.

Financial technology, built like a bank

With robust financial technology at its core, TiPJAR offers a secure and reliable platform, built to meet the highest complaince standards.

A solution for any kind of business

From restaurants to hotels, TiPJAR is the go-to solution for any kind of business looking to revolutionize their tip management.

Totally compliant with new legislation

A fully compliant solution that ensures your business meets all the requirements of new legislation, while keeping your teams happy!

A revolution built with purpose

We exist to help empower tipped workers with instant access to their tips, financial security, unrivalled transparency, and most of all – a method with which they can collect and share tips across teams fairly.

But our mission doesn’t stop there. We also equip businesses with a powerful tool to reward, motivate, and retain their exceptional staff, eliminating the notorious administrative headaches associated with tips on a global scale. We understand the challenges faced by businesses in managing this crucial aspect, and we are here to provide a game-changing solution.

TiPJAR® Accounts
1
Registered Users
0
Tips Processed Annually
£ 10 M+
Transactions
0.1 M+

Introducing

Distribute service charges or credit card tips, transparently.

Fair Tips Act: The Final Code Of Practice is Here

Business

Let’s dive deep into the  Final Code of Practice under the Fair Tips Act, which has been officially released by the Department of Business and Trade this afternoon (Monday 22nd April). Originally scheduled for implementation from July 1, 2024, the start date has now been shifted to October 1, which we imagine is designed to give operators additional time to prepare!

The changes in the new code are significant and aim to increase transparency and fairness in how tips are distributed not just within the hospitality sector but also in other tipped industries. Throughout the development of this code, TiPJAR has been working closely with the Department of Business and Trade. Our goal has been to lend our industry expertise to help shape a framework that addresses the needs of both workers and businesses effectively.

Highlights of the Final Code of Practice:

  • Clarification on Agency Workers: The updated legislation clarifies that for the purposes of tip allocation, the ’employer’ is regarded as the business that hires the agency worker. If tips are passed to Agencies for payment to workers, the Agency retains the obligation to ensure no deductions from tips (aside from income tax). This ensures that agency workers are treated equitably in line with directly employed staff concerning tip distribution.
  • Emphasis on Hours Worked: The code now includes hours worked during the period that tips were received as a factor to consider in businesses implementing a ‘fair’ distribution under the legislation.
  • Encouragement for Worker Consultation: The code strongly advises employers to engage with their workforce in developing tipping policies and reinforces that team members’ view of “fairness” will be a consideration.
  • Exclusion of Digital Direct Tips: Tips collected digitally, directly from customers to staff, are not considered employer-received tips and are out of scope, subject to correct operation of these platforms and relevant HMRC guidance.
  • Anti-Discrimination Safeguards: Strengthened provisions to prevent any form of discrimination in the distribution of tips, ensuring fairness for all employees regardless of background or characteristics.
  •  

We are honoured to have consulted on this vital Code of Practice, which clarifies how employers should handle tips passed to their dedicated teams. At TiPJAR, we are dedicated to promoting fairness and transparency in tip distribution, and we believe this Act will greatly benefit millions of tipped workers and help level the playing field across various sectors. We are excited to support businesses as they navigate these changes and seize the opportunities they bring.

The legislation mandates that all tips and service charges be distributed to staff without deductions, requiring businesses to adopt a clear and equitable distribution system. This reflects a broader legislative acknowledgment of the hard work by industry employees and aims to safeguard their earnings.

Further Insights from the New Code:

  • Handling of Non-Monetary Tips: The code provides guidelines for the fair distribution of non-monetary gratuities, like vouchers and service tokens, ensuring they are assessed for their monetary value and shared appropriately.

  • Record-Keeping Best Practices: Businesses must now keep detailed records of all tips received and their distribution for three years. TiPJAR offers solutions to help businesses maintain these records accurately and securely.

  • Support Systems for Workers: In collaboration with industry partners, TiPJAR is set to facilitate access to information and advice to help workers understand their rights under the new legislation and how to address concerns.

  • Industry-Wide Collaboration and Education: We are initiating collaborations with hospitality associations to offer educational programs about the new code, preparing the industry to adopt these improved standards.

  • Feedback and Continuous Improvement: We are establishing channels to gather feedback from both employers and employees on the effectiveness of the new practices, which will guide any necessary adjustments or updates in collaboration with the Department of Business and Trade.

At TiPJAR, we are committed to ensuring a seamless transition to the updated tipping practices and helping our industry embrace a fairer, more transparent future.

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We Are At A Tipping Point

We are at a tipping point

A thought leadership piece by Ben Thomas, CEO at TiPJAR

Whilst many in the industry have welcomed the new tips legislation as a needed levelling of the playing field for all, the truth for many is that the timing could not really be worse. 

Not only following some of the most challenging years in living memory (I won’t list what we’ve faced these past years because it’s frankly just too depressing) but now the 1st July deadline comes in the wake of the largest increase in minimum wage most of us can remember. Justifiable in the context of a cost-of-living crisis and lingering high inflation, but very, very hard to accommodate for already stretched hospitality businesses. 

Hospitality businesses have always been hard to run.  Margins are tight, competition is intense and the rate of failure has never been higher. 

So it shouldn’t surprise us that although most businesses publicly claim the service charges and tips they collect go to staff, the truth is most have been forced to adopt a policy of retaining some amount of tips and service charges historically.  The intention being to cover the substantial costs of getting this money to staff in a way that is “fair” (whatever that means in each circumstance) and recouping what they view as other legitimate costs for staff benefits. 

Regrettably, over time, some pushed this further than the government could tolerate.  Hence we’re now faced with a requirement that every penny of these funds is paid to staff, within a narrow time frame, and only to those staff (usually) who work in the place they were collected as their normal job. 

Those that retained some portion of the funds to cover costs now face a hole in the P&L. Others who took the view that head office or non-site staff should get a share too (after all they unquestionably contribute, so why shouldn’t they?) now face the government simply disagreeing with this practice, and big shortfall in head office salary budgets. 

I’ve probably heard every story around treatment of tips and service charges.  From 90% retained by the business (justified because it allows them to pay fair wages) through to head office team members whose salaries were up to 80% comprised of tronc (because they impact all the customers’ experience).   

But has the time has come for all of us to let go of judgement about any of this?  The “naming and shaming” and the blaming breaks my heart – because there is almost always a real, valid, struggling business at the centre fighting to grow, to thrive and trying their best to look after their people,  customers and investors.  Equally on the other side, the virtue-signalling and heckling of others just doesn’t help. 

So let’s stop, and instead can we put the energy into working out together how we get to where we now need to be? 

 Over the past few months we’ve seen the whole sector go through what feels like a classic change process.  First denial – disbelief that the government would possibly stick to such a seismic change.  Then anger and resistance, with real rage that even the card processing fee (money which we don’t even get) can be clawed back from the service charges or tips collected. 

It’s understandable that some are questing to move into exploration – and testing new approaches.  We’ve seen businesses – in my view bravely – try new things.  Some have included an optional additional charge on the bill rated as a percentage of spend, being up front this is to help fund the overall experience.  Unfortunately, the swift response from Customers and the press was not good.  We should be grateful to them.  Now we know. 

Others have trialled fixed cover charges – but have found it difficult to do this at a level that makes a difference, and again, customers are quick to challenge, less likely to then optionally tip or pay an optional service charge, and few have been able to maintain it. 

Given this, there really are only three things to think about if you have been operating a service charge with a retention for the business:  Whether or not to maintain it and at what level, and how much to increase your revenue or reduce costs as a result. 

Starting by understanding what level of service charge is needed to maintain what for your business is an acceptable level of tronc to competitively attract, retain and reward your on-site team is the first decision.  This is where the service charge should be set, because that is all we’re now allowed to do with it. 

If that creates disparity, because you were sharing across sites (now not allowed) you’ll need to review remuneration policy.  Perhaps there is a top up in lieu at delivery-heavy, low service charge sites. Unconventional, yes, but possibly necessity. 

Then, this will leave a shortfall – based on the wage increases you’ve needed, any portion of the service charge which previously may have funded head office or off-site staff distributions, and any amount you used to retain.  This can only be covered by increased revenue – price increases or for the brave, targeting growth and getting more customers through the door – or reducing costs if you’re lucky enough to have scope to do so. 

This is an uncomfortable reality. Yet as with so much in business, the winners will be those who are fastest to get to through the change process.  It’s time to push to reach acceptance and then build commitment to make these difficult decisions.   

Help is out there – in particular our partner business The Tronc Advisor is offering Propel subscribers a first-come-first-served discounted fixed price review of any operators’ current position, and can provide fast and simple feedback on the decisions they may need to consider. 

Working in the hospitality industry is a great privilege, a world full of wonderful people, incredible innovative businesses, and real passion for creating amazing life-enriching experiences for our guests.  Whilst the changes we’re facing are very challenging, I believe our sector is rich in tenacity, creativity and drive to overcome them, if we can work together with honesty, positivity and the considerable force of our collective will. 

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Free E-Learning Courses – The Fair Tips Act

Free E-Learning Courses - The Fair Tips Act

The hospitality industry is on the brink of a transformative era. With the impending enforcement of the Employment (Allocation of Tips) Act 2023 on 1st October 2024, a seismic shift is set to occur, benefiting over two million workers in the UK’s hospitality, leisure, and services sectors. For many businesses, the preparation to align with this legislation—and the commitment to ensuring fair pay for their teams—is already underway.

Navigating the complexities of managing, distributing, and calculating tips can be daunting, especially considering the varying contract terms that affect our industry. There are so many intricate details and nuances to consider before the legislation becomes active.

That’s why Access CPL Learning and TiPJAR have developed these FREE training courses to help you ready your operations for the legislation and bolster your teams with confidence!

Your Preparation Playbook

We’ve synthesised the expertise from leaders like UKHospitality, The Tronc Advisor, and TiPJAR into a preparatory checklist:

  1. Clarify Policies and Procedures: Equip your team with a transparent, accessible guide to the new tipping protocols.

  2. Evaluate Current Systems: Review your HR and payroll systems now to meet the legislation’s reporting demands.

  3. Craft a Fair Tipping Strategy: Consider developing or revising your tipping policy, contemplating the use of tronc systems and whether to manage them internally or externally.

  4. Consult with Third Parties: Engage with agencies to ensure fair tip distribution practices for contract staff.

  5. Appoint a Troncmaster: Weigh the advantages of in-house versus external troncmasters for handling your tipping system.

  6. Prepare for Reporting Obligations: Prepare to meet transparency demands; maintain records of all tips and clearly communicate how long these records are retained.

  7. Leverage Existing Software: Explore features in your current payroll or scheduling software that could facilitate tipping policy management.

  8. Revisit Holiday Pay Practices: Ensure your holiday tronc payment practices comply with the new law.

  9. Educate Your Team: Comprehensive training will be key to ensuring a thorough understanding of rights, fair tip allocation, and building trust within your team.

Learning to Lead

In partnership with TiPJAR, Access CPL Learning, part of the Access Group, has created fresh, free e-learning courses to guide managers and team members through the new legislation, enhancing comprehension and ensuring everyone is well-equipped to move forward confidently. We’re committed to updating our courses in tandem with any changes, including those stemming from the still-evolving draft Code of Practice.

Your Next Steps

Arm your managers and team members with our free courses. We’re devoted to supporting operators in fostering fair and transparent tip allocation, empowering teams, and fortifying the hospitality sector’s integrity.

Stay ahead of the curve, and support your team with these new courses:

Book A Demo

Book a chat with us today and hear how TiPJAR® software can help your business grow!

8 Steps Hospitality Operators Need To Take Before October 1st

8 Steps Hospitality Operators Need To Take Before 1ST OCTOBER 2024

The new tipping legislation is coming! You need to take these steps to remain compliant.

With the 1st of July fast approaching, the hospitality industry is bracing for a significant shift in tipping legislation that will reshape the way businesses manage and distribute tips and service charges. 

As operators prepare to navigate these changes, ensuring compliance with the new regulations becomes paramount to avoid penalties and maintain trust with both staff and customers!

So to help, we thought we would outline 8 essential steps that hospitality operators need to take to ensure compliance before the new tipping legislation comes into effect! From establishing clear policies to reviewing existing tronc setups, each step is vital in preparing businesses for the regulatory changes ahead!

the legislation is live!

Step One:
Get Your Policies Straight

It’s time to put your intentions and policy down on paper. Your business should start making changes by crafting a clear and comprehensive policy that spells out exactly how tips and service charges are shared up in your business.

It’s really important that you don’t forget anyone—front of house, back of house, and even those agency folks should be covered in your policy.

This isn’t just about having a document to tick a box; you need to think about setting the tone for fairness and transparency in your businesses tipping practices. Take this as a real opportunity to address any skeletons you may or may not have hidden in your tronc closet.

Step Two: Talk about it

Like it or not clearly communicating your policy, and empowering your teams with knowledge about their rights in regard to the upcoming changes in tipping regulations is about to become an essential part of compliance. 

We’d recommend hosting a meeting or training session to discuss the new rules and ensure everyone understands their implications, and that your staff are equipped to confidently address any inquiries or concerns from customers regarding tipping practices. By educating your staff, you not only ensure compliance but also demonstrate transparency. Encourage open communication and create a supportive environment where questions are welcomed and addressed. 

With informed and prepared staff, you can navigate the transition smoothly and uphold your commitment to excellence in customer service.

Step Three:
Consider implementing a tronc

Now might be the perfect opportunity to explore the benefits of implementing a tronc system if you haven’t already done so.

Tronc arrangements offer a streamlined approach to tip distribution, aligning with the requirements of the new legislation while also benefiting your business and staff. We would definitely recommend taking the time to assess your options and determine whether integrating a tronc system could enhance your operations.

Implementing a tronc system offers several advantages over not having one:

  • Compliance:
    With the new legislation emphasising fair and transparent tip distribution, a tronc ensures that your business adheres to legal requirements, reducing the risk of penalties or disputes.
  • Fairness and Transparency:
    A compliant troncmaster must promote fairness by establishing clear guidelines for distributing tips among employees based on predetermined criteria, fostering transparency and trust.

  • Efficiency When Choosing An Automated Solution:
    Automated Tronc systems simplfy the process of tip allocation, saving time and resources compared to manual methods. This efficiency allows your staff and head office teams to focus on delivering exceptional service rather than managing tip distribution.

  • Employee Satisfaction:
    Fair and timely distribution of tips is an essential piece of the new legislation. By outsourcing a troncmaster – you’re putting the pressure of timely distribution on them, rather than your payroll teams.

  • Financial Benefits:
    Tronc systems can lead to huge cost savings for both employers and employees. By exempting tips from National Insurance contributions, businesses can reduce payroll expenses, while employees may enjoy increased take-home pay. TiPJAR can even work with you to reclaim up to 6 years worth of NICs you and your staff have already paid on tips.

Step 4: Review Your Existing Tronc Setup (If you do have one)

Got a tronc arrangement already running? Time for a check-up! Take a good look under the hood and make sure everything’s running smoothly. It’s critical that operators check that their setup aligns with the new rules and regulations. 

  • Double-Check for Compliance and Fairness:
    Take a closer look at your tronc arrangement to see if it’s playing by the rules. Is it fair? Transparent? Fair pay for fair work, right? If you spot anything you’re unsure about, or places where things could be better, don’t hesitate to fix them or seek professional advice. It’s all about keeping things on the up-and-up and making sure everyone’s happy.
  • Spot Where You Can Boost Performance:
    Look for any areas where your tronc could use a little boost. Maybe there’s a way to make things run smoother or shine a light on how tips are shared? Have no idea how yo’re going to sort the reporting aspect of the legislation? Keep your eyes peeled for ways to make your tronc even better and more effective for your team.
  • Get Your Team Involved
    Time to rally the troops! We’re huge believers that it’s critical to have your team involved in the review and policy-writing process. Their feedback is gold. Open up the floor for ideas, suggestions, and any concerns they might have. After all, you’re all in this together!
  • Stay Committed to Getting Better:
    Tronc management is an ongoing journey, not a one-time thing. Keep an eye on how things are going, and don’t be afraid to make changes along the way. Stay on top of the latest rules and regs, and keep your tronc in tip-top shape. 

Step 5: Crunch the numbers

It’s time to dive into the numbers and assess how the legislation may affect your financial landscape. By thoroughly analysing the financial forecast, you can anticipate any potential hurdles and devise strategies to navigate them effectively.

With insights gleaned from your financial assessment, chart a strategic course for the future. Consider various scenarios and develop contingency plans to address any challenges that may arise. Planning ahead ensures you’re equipped to steer your business towards continued success.

Before implementing any changes, carefully review the terms and conditions associated with your tronc. Pay close attention to any hidden costs or contractual obligations that could impact your financial outlook. Thorough scrutiny now prevents unwelcome surprises later.

Things to consider when looking at how the legislation may impact your business financially:

  • Have you been paying for National Insurance on tips? If you were not deciding distribution as an employer you and your staff could be eligible to claim up to 6 years of contributions back! We work closely with The Tronc Advisor to help operators claim these payments back, as well as set up a compliant tronc going forward.
  • Take a look at how much distributing tips or running your tronc is currently costing you. We’d recommend shopping around if you’re using an external solution, or looking at how many man hours are put in by your payroll team if you’re running a tronc internally.
  • If you previously kept a portion of tronc back as a reserve to distribute later whether to cover holidays or quieter periods, it’s simply no longer allowed. It’s time to be open with your team their income may fluctuate more going forwards, and consider whether it’s viable to pay tronc to team members who are not working – on holiday or other leave – when there’s no “tronc reserve” to cover this.   
  • You may even want to look at the balance between salary and tronc, and make sure you’re not over-reliant on tronc to achieve a sustainable and competitive overall reward.  This may mean looking at service charge levels, pricing levels and salaries – as well as how tronc is shared out.
  • With salary negotiations involving tips becoming a big no-no, it’s time to review staff compensation strategies. With tronc no longer a part of salary negotiations, reassess how you’re going to attract and retain talent effectively.

  • Consider the long-term financial impact. Look beyond immediate changes to anticipate how implementing a compliant tronc system can support your business’s financial health and sustainability over time.

Stay agile and responsive to changing circumstances, allowing you to adjust your approach as needed. By remaining adaptable, you can effectively navigate unforeseen challenges and seize new opportunities as they arise.

Step 6: Update Employee Contracts

Updating employee contracts is a critical step in ensuring compliance with the new tipping legislation. This involves reviewing existing contracts and making necessary amendments to reflect any changes in tip distribution policies mandated by the new laws.

Previously, it wasn’t uncommon to agree with staff to take a different wage or salary in exchange for a different share of tronc or tips, usually a reduced salary for a higher share of tronc. However, under the new legislation, you can’t leverage commitments on tronc distribution as part of salary negotiation.  Staff wages or salary (whether for new starters or existing team members) must agreed without reference to tronc distributions.

Employers must clearly define the proper basic pay amount, excluding tips, in employee contracts to avoid liabilities. Failure to update contracts before the law takes effect could result in tips being considered part of the basic wage, subjecting the full amount to National Insurance contributions.

It’s also really crucial to ensure compliance with minimum and living wage laws, which prohibit salaries from being topped up with tips. Stay ahead of these changes by updating your employee contracts sooner, rather than later!

Step 7: Evaluate Technology Solutions

When preparing for the new tipping legislation, it’s essential to assess your technology solutions to ensure they align with compliance requirements. Tip management software and modern point-of-sale (POS) systems offer efficient ways to streamline tip distribution and enhance accuracy. These solutions can automate tip calculations, track tip amounts for reporting, and ensure transparent distribution among staff members. By leveraging technology, businesses can eliminate manual processes, reduce errors, and maintain comprehensive records of tip transactions.

Additionally, advanced POS & rota systems may integrate seamlessly with tronc management platforms, facilitating smooth communication and data exchange between systems.

Evaluating and investing in technology solutions tailored to your business needs can significantly improve operational efficiency and compliance readiness in preparation for the new legislation.

Step 8: Seek Professional Advice

Navigating the complexities of the new tipping legislation can be daunting. If you find yourself uncertain about its implications or how to ensure compliance, seeking professional advice is paramount.

Legal or financial experts with specialised knowledge of hospitality industry regulations can provide invaluable guidance and clarity. They can assess your specific situation, review your existing practices, and offer tailored recommendations to ensure compliance with the new legislation.

Professional advisors can also help interpret the intricacies of the law, address any potential risks, and implement effective strategies to adapt your operations accordingly. 

At TiPJAR, we understand the importance of staying ahead of regulatory changes and ensuring compliance with the new tipping legislation. That’s why we work closely with Andy Hamman, the UK’s leading tronc expert at The Tronc Advisor.

We're here to help!

As the countdown to October 1st begins, hospitality operators must take proactive steps to ensure compliance with the upcoming tipping legislation. By following these essential guidelines, businesses can navigate the regulatory changes smoothly and maintain trust with both staff and customers.

At TiPJAR, we prioritise working closely with you and your team to establish fair, transparent, and compliant policies tailored to your business’s unique needs. Recognising the diversity of operations, we reject a one-size-fits-all approach and instead collaborate with you to craft policies that resonate with your values and team dynamics, whether you run a bustling restaurant, a cozy cafe, or a lively bar.

Our Supertronc product offers automated tracking of transactions and tip distributions, ensuring staff transparency and timely payments. By implementing a compliant tronc policy through TiPJAR, businesses can enjoy significant savings on National Insurance contributions while streamlining tip administration and maximizing cost-effectiveness. We’ve partnered with The Tronc Advisor to assist in recovering historical NICs, showcasing the tangible financial benefits of our solution, which is designed to ensure compliance effortlessly.

We’re here to support businesses every step of the way. If you’d like to find out more about our solutions – get in touch with the form here.

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Tronc & The National Insurance Advantage

The National Insurance Advantage OF Compliant Tronc Schemes

In the midst of discussions revolving around minimum wage hikes and VAT deliberations, an often underestimated aspect deserving attention is the potential savings of National Insurance (NI) contributions linked to tips and service charges.

Many operators may not be aware of the substantial savings that tronc policies can unlock. So, let’s dive into the government’s support for compliant tronc schemes and how businesses can leverage this endorsement for financial efficiency.

Government's Support for Compliant Tronc Policies

Compliant tronc policies, backed by the government, are designed to align with the principles of fairness and transparency. The essence of these policies lies in ensuring that tips and service charges are distributed equitably among staff, acknowledging their contributions to the overall guest experience.

Acknowledging the role of tips and service charges in supplementing income, compliant tronc policies provide operators with a framework that suits the industry’s dynamics while ensuring compliance with legal and regulatory standards.

Operators embracing compliant tronc policies can unlock substantial savings on National Insurance contributions. This dual benefit ensures a positive impact not only on the financial health of businesses but also on the take-home earnings of the hardworking hospitality teams.

Unlocking Potential Savings

A tronc policy is essentially a system implemented by businesses to fairly distribute tips and service charges among their staff. It ensures that employees receive a fair share of the gratuities they help generate, typically based on their level of service or other relevant criteria.

A tronc policy is instrumental in unlocking potential savings for businesses and their employees. By implementing a fair and compliant system for distributing tips and service charges among staff, businesses can ensure that employees receive their fair share of gratuities based on their contributions. But, not all tronc policies meet legal and regulatory standards! Compliance is essential, as it ensures fairness and transparency in tip distribution, while also unlocking savings in National Insurance Contributions (NICs).

NICs are payments made by employees and employers to fund state benefits and services in the United Kingdom, including the NHS and state pensions. By adhering to compliant tronc policies, businesses can mitigate NICs associated with tip income, leading to significant cost savings for both employers and employees.

how can we help?

TiPJAR’s solutions not only streamline tip administration but also provide a strategic approach to NICs, maximising cost-effectiveness for both businesses and staff.

Cash-equivalent tipping

TiPJAR’s cashless tipping solution has been developed in collaboration with HMRC, ensuring that tips collected through this method are considered cash-equivalent. This distinction exempts both businesses and staff from National Insurance Contributions (NICs), aligning cashless tips with the treatment of cash tips. This approach alleviates the tax burden on businesses, with the responsibility for taxes on tips falling on the staff. By maintaining a clear separation between tips and business revenue, Cashless Tipping eliminates NICs for both parties, resulting in significant cost savings for businesses and employees alike.

tronc

SuperTronc, our cutting-edge tronc management solution, is meticulously crafted to adhere to the impending tipping legislation, ensuring full compliance for businesses. Through the implementation of a compliant tronc policy, SuperTronc enables businesses to mitigate or entirely eliminate National Insurance Contributions (NICs) commonly associated with traditional tipping structures. 

We’ve also collaborated with The Tronc Advisor to facilitate the recovery of historical NICs exceeding £25 million for businesses, highlighting the substantial financial benefits our solution offers.

Beyond simplifying tip administration, SuperTronc provides a strategic approach to NICs, enhancing financial efficiency for both businesses and staff members.

want to know how much you can save?

Why not try our Tronc & Tips Calculator to see how much your business & staff can save in National Insurance Contributions when implementing Supertronc with TiPJAR.

National Insurance Savings Calculator

National Insurance Savings Calculator

*Note: The figures provided are illustrative only and based on the NICs increase from April 2025.

Curious to find out more?

Get in touch!