Handing the tronc to a trusted member of your team can work brilliantly. It can also make the tips pool the main topic of conversation in the staff room.
If you run a restaurant, bar or hotel, and use a tronc scheme to distribute pooled tips, the Troncmaster is the person who decides how tips and service charges get shared out. Set it up properly and your team takes home more of what they’ve earned, with no National Insurance taken off, and you as an employer avoid paying NIC on those tips. Set it up badly and you could end up with an HMRC bill and a team who feel short-changed.
So should that person be one of your own employees? Before you decide, you need to understand the rules around who can and can’t be a Troncmaster, what responsibilities they have and the pros and cons of choosing someone from within your organisation rather than a third-party Troncmaster.
Troncmaster rules
Tronc payments are free of employer and employee National Insurance only when the employer has no say in who gets what. If you, or anyone acting for you, steers the split, HMRC can treat the money as ordinary pay and NICs become due.
The Employment (Allocation of Tips) Act 2023 added more on top. Since October 2024, employers have had to pass on 100% of tips and service charges, share them fairly, have a written tipping policy and keep records for 3 years. Staff can ask to see those records, and running a tronc doesn’t take you outside any of this.
There’s nothing stopping an employee being your Troncmaster, as long as they can run it independently and without friction with the colleagues whose tips they’re sharing out. THis requires them having a clear separation from anyone involved in hiring. Our article ‘Who cannot be a Troncmaster’ explains this in more detail.
The case for an in-house Troncmaster
Your senior bartender or head waiter knows who covered the double shift and who kept the kitchen going on a busy Saturday. That knowledge can make the split feel fair to the people it affects.
Tips are personal, and plenty of teams would rather talk to a colleague about them than email someone they’ve never met. Questions about this week’s payout can be sorted during the shift.
It also looks cheaper on paper. There’s no outside fee, and the role can be a good step up for someone ready for more responsibility, ideally with a pay rise to match.
The case against
Proving independence
Independence is hard to prove when your Troncmaster reports to a manager who reports to you. If HMRC decides management influenced the split, even informally, the NI saving can unravel and you could face arrears plus interest. A manager asking to check the figures before they go out could be enough.
Accusations of favouritism
When a colleague decides your tips, every allocation feels personal. One accusation of favouritism can sour a team quickly, whether it’s true or not, and your troncmaster still has to work alongside the person who made it.
Knowing what everyone earns
Your troncmaster will also know exactly what every colleague takes home. That’s a lot of sensitive information for one member of the team to hold.
Taking the responsibility
If something goes wrong, they’re the first person everyone will look to, HMRC included. It’s fair to ask whether they want that responsibility or whether it’s simply convenient for the business.
Covering holidays and leavers
Tips still need paying when your troncmaster is on holiday or off sick, and if they leave in December, someone new has to learn the process in your busiest month.
Keeping up with the 2023 Act
The Act adds to the load too, especially the record-keeping and staff requests to see those records. Putting all of that on an untrained employee is a risk for them and for you.
If you go in-house, set them up properly
If an employee Troncmaster suits your business, these steps give them the best chance:
- Choose someone outside management. HMRC sees owners, directors and senior managers in the role as a warning sign.
- Agree a written tronc agreement and tipping policy with the team, setting out how points or shares are worked out.
- Stay out of the allocation completely. Don’t approve or adjust the split before it goes out, just hand the money over in full.
- Give them proper training in tronc PAYE, RTI and record-keeping.
- Name a deputy and write the process down so payouts carry on when your troncmaster is away.
- Keep records for at least 3 years, ready for staff requests and HMRC.
The independent option
An independent Troncmaster sits outside your business, which makes your NI position much easier to defend. It also keeps tips out of the office politics, and the admin goes to people who run troncs every day. Your team still has a say in how the tronc works without anyone having to referee their colleagues.
That’s what we do at Tips and Troncs. We’re an independent Troncmaster for hospitality businesses, built around one idea: fair for all. We can work alongside your in-house payroll team or outside provider, or, if our sister company, Ascend Payroll runs your main payroll too, both sides of your pay run sit with payroll specialists you can call.
If you are unsure of which way to go, or if your troncs scheme is compliant, get in touch. We are happy to talk it through with you.