Understanding tips, troncs, and the rules around them.
Understanding some of the basic definitions and also the rules and regulations regarding tips and troncs is important. Tip4 are here to help you navigate the weird and wonderful world of tips and troncs, help you be compliant, and provide you with tips and tronc guidance and solutions. Our goal is to help drive the volumes of tips, help businesses be compliant, be exempt from paying NIC on the tips and tronc, and keep your staff happy.
A voluntary payment from a customer to a worker (or a group of workers) on top of the bill, given as thanks for service. Legally in the UK, it belongs to the worker, not the business.
A separate pot that pools tips and service charges and shares them out to staff under an independent arrangement. Run properly, payments out of a tronc are exempt from National Insurance.
Tips
100% of tips must be passed to workers — the employer cannot retain any portion.
No deductions should be taken by the business for admin costs, including card processing fees.
Tips should generally be distributed to staff at the venue where they were generated, unless a wider distribution can be justified as fair.
Non customer-facing workers can receive a share of tips where this is fair and linked to the business or site.
All tips must be fairly allocated.
Tips must be paid to staff no later than the end of the month following the month in which they were paid by the customer — not 30 days.
The business remains responsible for ensuring fairness and compliance, and must intervene if there are issues with a tronc.
Agency workers are entitled to receive tips in the same way as other workers.
Tips cannot be used by the employer to make up National Minimum Wage obligations, though the Act does not prohibit general wage negotiation.
A statutory Code of Practice is in force, providing guidance on fairness and transparency.
Troncs
A tronc can support compliance, but does not automatically mean the Act is satisfied — the employer remains legally responsible.
A written policy must be available explaining how tips are distributed and how this meets the legislation.
The policy must be accessible to workers, for example via an app or other accessible format.
Records of qualifying and paid gratuities must be kept for 3 years.
Workers can request information about their tips and allocation, and the employer must respond within a reasonable timeframe — typically within 4 weeks.
A worker can request information about total gratuities at a site, but is not entitled to see personal data relating to other workers — GDPR applies.
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