Effective Tronc Schemes Setup and Management

With the new law regarding tips and how they’re distributed coming into play in October of this year(2024), setting up a compliant tronc scheme is a necessity, particularly if your business deals with tips, gratuities and service charges. The question remains though how do you set up an effective tronc scheme? Not all schemes are the same and what works for one business might not work for all.

Setting the rules should be for the troncmaster to decide but staff should have an input as well, as when executed correctly, in a fitting manner for employees and the business alike then a well crafted tronc scheme can help heavily with staff retention. The opposite is true of a tronc scheme poorly executed.

For more advice on setting up a tronc scheme and how to operate it effectively and writing the parameters of the new employment law, contact the employment law and HR advisory team at Croner. Get award-winning, professional advice tailored to your business on 0808 501 6651.

Operating a basic tronc scheme

Basic tronc schemes are designed to keep things simple and easy to run and understand, 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, Anyone off sick or using their annual leave entitlement will not see a dip in their income as a result 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 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 particular type of 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, as it gives you the opportunity to divide a larger kitty more proportionately, amongst the allocated teams. 

Seniority

This can be done through title, length of service of both depending on your business’s preference. For instance an Maître d' would receive a larger percentage of the tips then 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 their percentage of the tips. 

Points

A points system allows you to amalgamate some of the aspects of other tronc systems and create 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 now in effect 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. 

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 if you have control over hiring and dismissal.
• 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 schemes.

Ensure compliance with the government's latest legislation, contact Croner today on 0808 501 6651.