Abuses of the ‘Tronc’ system and reform proposals



There is mounting evidence of abuse of the Tronc system used in the hospitality sector, which general union Unite links to the introduction of the higher NMW rate for workers aged 25 and over. A Tronc is a common fund into which tips and service charges are paid, for distribution to staff. Unlike basic pay, service charges that are automatically added to customers’ bills and distributed independently by a “Troncmaster” do not attract either employer or employee National Insurance contributions (NICs). 



Some employers are reported to be encouraging staff to accept wage cuts, reducing their pay to the level of the NMW and then topping it up using service charge payments. Although staff can make a small short-term saving through not having to pay NICs, they risk losing out on contributory statutory benefits such as statutory sick pay, maternity pay or the state pension, which all depend on NICs. Wages are also dependent on tips being paid by customers, which are not guaranteed. Tronc abuses have been identified across the hospitality sector. Unite says that HMRC seem “oblivious” to this development. 



Throughout 2018, Unite’s campaign — Fair Tips for Waiting Staff — has targeted offenders such as restaurant chain Pizza Express, balloted for industrial action at TGI Fridays, and encouraged members of the public to leave cash tips so that they reach the member of staff concerned.


The government has responded in its Good Work Plan, published in December 2018, by promising to change the law to ban employers from making deductions from staff tips so that they go in full to the workers providing the service. 


There has been a voluntary Code of Best Practice on NMW and Service Charges, Tips, Gratuities and Cover Charges in place since 2009, but voluntary self-regulation has failed in this sector.