Unlike countries such as the United States, where tipping culture is deeply embedded in the wage structure, the UK takes a different approach. This has evolved considerably in recent years, particularly with the introduction of the 2023 Employment (Allocation of Tips) Act.
In this blog, I explore the various methods of tip distribution in tronc schemes in UK establishments, examining how factors such as job role, seniority, and department (front vs. back of house) influence who gets what from the gratuities left by satisfied customers and, therefore, how employees and business owners can approach tips and tronc schemes.
The legal framework
Before going into distribution methods, it’s important to understand the current legal context.
The 2023 Employment (Allocation of Tips) Act requires that:
- 100% of tips go to staff (employers cannot take a cut or deduct any costs)
- Businesses must have a transparent, written policy on tip distribution
- Records of tip allocation must be maintained for three years
- Staff must receive their share of tips by the end of the month following collection
To get these tips to your employees, you require a Tips Distribution Policy. What are the rules that determine the allocation of the tips pool across the team?
Tips and service charges added to the bill or left in cash are discretionary, and most establishments distribute them to the team, both front and back of house, who are responsible for delivering the service.
There is no legal requirement for operators to use a tronc scheme, but the savings they give both the employer and employee in terms of National Insurance savings make them a savvy choice.
There is no one-size-fits-all approach to the distribution rules with a tronc scheme, and they commonly pick a scheme that first aligns with their operating structure and ideally with the ’buy-in’ from staff as to its fairness.
Simple tip distribution models
#1 Hours-based systems
This straightforward approach distributes tips based primarily on hours worked, which could be contracted hours or actual hours worked.
Contracted hours mean that the tips distribution is smoothed over in times, such as holidays and other absences. Actual hours worked is the most popular, however, as it is often seen as a ‘fair’ reflection of who put in the hours to deliver the service and therefore receive the tip.
#2 Weighted-hours systems
Operators sometimes add another level to the hours worked model with additional weighting factors, such as role multipliers, which recognises that contribution is often correlated to seniority.
Basic Hours-Weighted Formula:
Individual Share = (Individual Hours Worked ÷ Total Staff Hours) × Total Tips
Enhanced Hours-Weighted Formula with Role Multiplier:
Individual Share = (Individual Hours × Role Multiplier ÷ Sum of All Weighted Hours) × Total Tips
Example role multipliers:
- Management/Head Chef: 1.5
- Senior staff: 1.25
- Standard staff: 1.0
- Junior/trainee staff: 0.75
#3 The percentage-based system
Some establishments allocate fixed percentages to different departments or role categories.
The split can have further sub-divisions, for example;
- Front of house could receive 70% of the pool, with this 70% being split Servers (40%), Bartenders (15%), Hosts (10%), Support staff (5%)
- Back of house would receive 40% with this being split Chefs (20%), Kitchen porters/dishwashers (10%)
The advantages of this is that there is clear departmental recognition. It is easier to calculate than more complex points systems. On the downside, it can cause tension between departments.
#4 The point-based system
One of the most structured and flexible approaches to tip distribution is the point-based system, which assigns different values to different roles based on factors such as:
- Skill level required
- Customer interaction
- Responsibilities
- Training required
- Seniority within the role
These points are then used to determine the percentage of the tronc the employee receives, multiplied by the hours they worked.
The advantage of this system is that it recognises skill differences, responsibilities, seniority and length or service while still including all staff.
If you do go down this route, however, I would advise involving your staff, or representatives, and make sure the rules are very clearly explained and communicated. This is where an independent troncmaster really earns their crust.
Front of house vs. back of house
Perhaps the most contentious aspect of tip distribution is how to fairly divide tips and gratuities between front of house (FOH) staff who directly interact with customers and back of house (BOH) staff who rarely receive direct appreciation despite their crucial role.
Team FOH argue that they are the ones with the direct customer interaction. In fact, for many customers, their view on the service is largely formed by their experience of their servers and greeters, so shouldn’t FOH be recognised for the fact that the tips reflect their personal service quality and that customers often intend the tip to go to them? There is also the fact that FOH staff are often paid less than BOH staff
On the other hand, Team BOH, states that in a dining environment, it is the food that customers come for and therefore they have a greater contribution to the customer experience and food quality is the major factor in repeat custom. In the past, BOH were often excluded from tips so there is a move to acknowledge and reward the efforts, especially in what can be challenging physical conditions.
Most hospitality establishments increasingly recognise the entire team’s contribution, with successful approaches including:
- Hybrid systems – guaranteeing a minimum percentage (often 20-30%) to BOH while allowing FOH to retain a higher proportion
- Quality-linked distribution – adjusting BOH percentages based on customer feedback, specifically about food quality
- Transparent communication – clearly informing customers about the establishment’s inclusive tip policy
Best practices for tip distribution models
Based on industry experience and the new legal framework, these best practices help ensure fair and transparent tip distribution.
Document everything
Maintain clear records of all tips received and distributed, plus any staff consultations you have had about the distribution rules.
Involve staff
Seek input when designing or modifying distribution systems. This could be in the form of a survey, a more informal discussion or even a survey.
Communicate clearly
Ensure all staff understand how the system works and why it’s structured that way. Build the communication into your staff onboarding and staff handbook. Don’t forget to regularly remind your team, don’t rely on telling them just once.
If you are using a tronc scheme, it can also be very beneficial to let them know how much NIC this has saved them and, if you are using the employer savings to re-invest in the business and/or team, let them know about that too.
Regular review
Assess your distribution methods regularly to ensure they remain fair and motivational in conjunction with the Troncmaster of your tronc scheme.
Be transparent with customers
This is an area that some operators overlook. Increasingly, especially when service charges are added to the bill or customers are paying via card or contactless, customers are asking where the tips are going. There is a fear that the money is going into the business bank account and that the staff won’t receive it.
Make sure your server staff are fully briefed on the distribution model so they can reassure the customer that it is being distributed fairly, and that that 100% of the tips is going to staff.
You can also consider creating signage or menu notes explaining your fair tipping policy.
The distribution of tips in hospitality venues involves balancing multiple factors: front vs. back of house, seniority vs. merit, individual vs. team performance, and simple vs. complex systems. There is no one-size-fits-all solution, but the best systems reflect the unique culture and priorities of each establishment while ensuring all team members feel valued.
With the new legal framework ensuring tips reach staff, the focus now shifts to distribution methods that promote teamwork, recognise varied contributions, and ultimately enhance the customer experience. Whatever system is used, transparency and fairness should be the guiding principles in an industry where team efforts create exceptional experiences worth tipping for.
For those businesses choosing to use a tronc scheme, it must be understood that to be compliant, and achieve the NIC savings, there must be an independent Troncmaster in place. The business can, and will, make representations to the Troncmaster but the basis for distribution must be made by the Troncmaster, in conjunction with the wishes of the employees.
If you would like advice and support on creating your fair tip distribution rules and setting up a tronc scheme, contact us.