Glossary · UK
What is Tronc?
A separate payroll scheme used to fairly distribute tips, gratuities and service charges among staff, run by a designated troncmaster.
Full Definition
A tronc (from the French "tronc des pauvres", a collection box) is an arrangement, common in hospitality, under which tips, gratuities and discretionary service charges collected from customers are pooled and then shared out among staff according to a fair, pre-agreed formula, rather than being paid out directly by the employer alongside normal wages. A tronc is run by a "troncmaster" -- an employee, manager or sometimes an independent third party -- who decides, or applies an agreed formula for, how the pooled tips are allocated between staff, for example weighting by hours worked, role or seniority. Provided the tronc is genuinely independent of the employer's control over the amounts individuals receive, tips distributed through it are exempt from employer and employee National Insurance, even though they remain subject to Income Tax, which HMRC collects via PAYE using the troncmaster's own PAYE scheme reference. This NI exemption is the main reason many hospitality employers set up a formal tronc rather than simply adding tips to ordinary wages, where full employer and employee NI would apply. The Employment (Allocation of Tips) Act 2024, in force from 1 October 2024, separately requires employers to pass on all qualifying tips, gratuities and service charges to workers in full, without deductions (other than tax), no later than the end of the month following the month in which the tip was paid, and to have a written policy on how tips are dealt with, alongside a statutory Code of Practice on fair and transparent distribution -- rules that apply whether or not a tronc scheme is used, but which make a well-run, genuinely independent tronc an attractive way of demonstrating fairness and transparency in practice.