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The UK Government is introducing the Employment (Allocation of tips) Bill, which will make it a legal requirement for hotels to pass on the full amount of tips paid by customers to staff. This means that businesses will not be able to deduct fees from tips collected and will be required to follow a Statutory Code of Practice. The legislation and Code of Practice will carry statutory weight, allowing it to be cited as evidence in employment tribunals.
At Buzzacott, we already champion the allocation of tips to staff through tailored tronc systems that are fair, ethical, and protect our clients from any challenges from HMRC. We can help you prepare to meet the requirements and will guide you through any challenges that may arise with the proposed new legislation.
By sharing discretionary tips through a tronc scheme where all qualifying conditions are met, tips are exempt from employers and employees NICs. Given that employer and employee NICs total over 25%, this represents significant savings for both the employer and staff. See our diagram below showing life before vs after a tronc.
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Having a tronc can be a real competitive advantage over other hotels when it comes to recruitment and retaining staff. In addition to staff taking home more, using an independent troncmaster gives staff the peace of mind that there will be no influence by the employer when sharing tips, thereby removing the possibility of bias or favouritism. This in turn makes staff feel valued and improves morale across the business, often leading to increased staff retention and better service provided to customers.
We were recently approached by a leading hotel chain, who were looking to improve their tipping practices and better reward and motivate their staff. They had been receiving tips but were paying them via their payroll.
We met with both management and employees to create an arrangement that was mutually beneficial, introducing key performance indicators in the tronc that would reward staff for hitting targets. This tailored tronc, run for the benefit of staff, has in turn led to the tips being utilised fully and increased staff take home. The hotel has also seen an improvement in retaining staff and attracting new joiners.
Here at Doyle Collection, we are delighted to be partnered with Buzzacott. The level of service, expertise, professionalism, and dedication from the team made it easy for us to deliver the company tronc arrangement for our team members in weeks. They helped us through each stage of the process and gave comfort in knowing that we are compliant with HMRC rule and regulations.
Dermot Nash – Doyle Collections
With the Employment Allocation of Tips Bill (Tipping Act) and Code of Practice set to come into force on 1 October 2024, it's crucial for your business to adequately prepare for compliance. Download our free checklist today to ensure you're ready for the upcoming changes.
Call us today on +44 (0)20 7710 3389 or email troncmaster@buzzacott.co.uk. Alternatively, fill in the form below and a member of our team will be in touch.
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