Effective Tronc Schemes Setup and Management

With the law change regarding tips and how they’re distributed having been brought into legislation (October 2024) employers should ensure that they are compliant with the Employment (Allocation of Tips) Act 2023, if their business deals with tips and gratuities.

The question remains though how do you set up an effective tronc scheme? There are many benefits of a tronc scheme (besides legal compliance), but not all schemes are applicable to all business models. For example, hospitality businesses might benefit from one type of tronc system, where as a taxi firm might benefit from another type.

For more advice on setting up a tronc scheme to deal with tips and service charges, how to operate it effectively and/or navigating the parameters of the new employment law, contact the Employment Law and HR advisory team at Croner.

Call today on 01455 858 132.

Setting the rules for a tronc scheme should be for the troncmaster to decide, but staff should have an input as well, as when executed correctly, a well-crafted tronc scheme can help heavily with staff retention. The opposite is true of a tronc scheme that is set up incorrectly and poorly executed.

• Operating a basic tronc scheme
• Advanced tronc schemes
• The Allocation of Tips legislation what does it mean?
• Ensure your Troncmaster set up your tronc scheme correctly
• Non-compliance can result in a legal claim
• Need help setting up a tronc scheme?

Operating a basic tronc scheme

Basic tronc schemes are designed to keep things simple, easy to understand and run, however they don’t allow for nuances such as staff seniority etc. Some examples of “basic tronc schemes are: 

Even-share tronc scheme

As the name suggests, this involves all staff evenly sharing tips and gratuities, regardless of their individual hours worked. 

There are pros and cons to this system. On of the pros is that anyone off sick or using their annual leave entitlement will not see a dip in their income because of their lack of tips. However, the cons are that part-timers will earn the same amount in tips as those who work full time, meaning there will be disproportionate earnings. 

Contracted hours tronc scheme

This has the benefits of the even shares system, but with the added advantage of ensuring that part time workers are earning their share of the distribution of tips in proportion to the hours that they are contracted to work.

Actual hours tronc scheme

This is based on the same principle as the contracted hours system, however, this type of scheme is based on the actual hours worked, rather than the hours scheduled in the contract. 

Advanced tronc schemes

Advanced tronc schemes have their uses in situations where splitting tips and gratuities isn’t necessarily cut and dry. For instance, you might use the following, more complex tronc schemes when you want to reward things like seniority. 

Direct-tipping

This is a great way to recognise individual contributions, for instance outstanding service for a client. In this tronc scheme, the recipient of the tip keeps the lion's share of the funds, and the rest goes into the pool to be shared amongst the rest of your staff. 

Departmental pooling

If you have multiple teams for instance front of house and back-room staff, then a departmental pooling might be beneficial. In this type of scheme there is the opportunity to divide a larger kitty (of pooled tips) more proportionately, amongst the allocated teams. 

Seniority

This can be done through title, length of service, or both, depending on your business’s preference. For instance, a Maître d' would receive a larger percentage of the tips than other members of the front of house team.

You can calculate this tronc based on salary too, but this could lead to other staff members being able to calculate each other's earnings based on the percentage of the tip's employees receive. 

Points

A points system allows you to amalgamate some of the aspects of other tronc systems. In essence, it creates a system where staff are awarded points and receive their share of tips based on the amount of points they receive.

The Allocation of Tips legislation what does it mean? 

Part of the new legislation around tips means that certain practices, such as tronc reserves, are now illegal.

The new law specifies that all tips and gratuities must be paid to staff no later than the end of the month (after the month of collection). This means that squirreling a portion of the tips away for a later date, is no longer possible or legal. 

Ensure your troncmaster set up your tronc scheme correctly

As an employer, ensure that your troncmaster does the following:

• Sets out a clear and defined tronc scheme that is transparent and easy to understand for all staff. This should include policies on all possible scenarios including things like absence. 
• Includes staff in the set up and onboarding of the tronc scheme.
• Keeps records and ensures their accuracy. 
• Ensures compliance with taxation laws, these may change from year to year.

Non-compliance can result in a legal claim

Doing any of the following is likely to land your business on the wrong side of an employment tribunal case. 

• Using tips to make up wages (living, minimum or otherwise) it is against the law.
• Being heavily involved in tronc set up and also having a controlling stake over hiring and
• Using a tronc to treat staff unfavourably via exclusion etc. - without a valid reason.

Need help setting up a tronc scheme?

Talk to our HR and Employment Law advisors today and understand your options when it comes to tronc management and setting up the ideal scheme for your business model.

Ensure compliance with the Government's latest legislation, contact Croner today on 01455 858 132.