There are many complexities involved in the Hospitality industry which makes it quite unlike any other, one of those being the existence of troncs. The issue of tips and gratuities, and how to process them, can present a minefield of questions and queries. One question that often arises is whether an independent Troncmaster is required.
There are several things to consider when answering this question.
First let’s start by looking at what a tronc is
A tronc is a mechanism to collate tips, gratuities, and services charges from customers, commonly within a hospitality or leisure setting, for onward fair distribution to those involved in delivering a service.
Why does there need to be a Troncmaster?
Setup correctly, and independent from the employer, payments from a tronc are able to be paid without National Insurance, a big saving for the members (employees) of the tronc scheme.
To achieve this you must break the link with the employer who cannot decide and pay tronc sums.
There needs to be a separate arrangement with the Troncmaster being a person(s) independent of the employer who controls the tronc.
Why do you need an independent Troncmaster?
Put simply you don’t. It is not a statutory requirement, and you can decide to have an employee as the Troncmaster. Having a truly independent troncmaster can be of benefit, however, for a number of reasons, including;
- It severs the link between the employer and the tronc, demonstrating the independence of the scheme
- Being a Troncmaster can be quite onerous and may be a responsibility not many employees or members of the tronc would be willing to take on
- Professional advice is also inlcuded with an independent Troncmaster, helping guide the tronc to compliance in a complex and nuanced area
- An independent Troncmaster also brings enhanced transparency helping to avoid staff/employer disagreement
Current hospitality industry situation
As the UK economy reopens and the hospitality industry gets back on its feet, there is renewed interest in troncs, particularly given the Government decision to exclude tronc amounts from earnings in calculating furlough payments throughout lockdown.
One of the new realities is that the cash economy is shrinking with health and safety measures pushing the use of contactless payments and card machines. Increasing card payments means that monies for tips and service charges are often mixed together and collected by the business.
This means that the employer is collecting more, which needs to be managed carefully back out to their teams. An independent Troncmaster can help manage that relationship between the business and team applying fairness, transparency and independence to the sensitive issue.
Future proofing
We also need to keep an eye to the future.
Looking forward, the Government are at some point expected to implement the findings of the Good Work Plan 2018. Here the fairness and transparency principles are extended to troncs with the expectation that employers would pass 100% of the monies collected through tips, discretionary payments and gratuities on to the staff involved in providing the customer’s experience.
This plan is designed to limit some of the unscrupulous practices in place with a small number of employers who applied charges for managing troncs reducing the amount passed through to employees. In many cases, this wasn’t simply a recovery of genuine costs incurred and included profit for the employer.
To summarise
Well managed troncs are essential to maintain compliance, maximize the savings for employees, and ensuring that there is an equitable and transparent means to distribute tips.
Whilst it is not a statutory requirement, the benefits of having an independent Troncmaster in place include:
- Easing the admin burden of running the Tronc scheme away from the business
- Reducing the risk of employee/employer disputes about how the Troncs are managed
- A more transparent, fair and independent process
- Handing troncs to an expert who can maintain compliance
If you would like to discuss setting up or reviewing your tronc scheme, please contact us. We would be happy to talk through your options.