Abuses of the tronc system


There is mounting evidence of abuse of the “tronc” system in the hospitality sector, which general union Unite has linked to the introduction of the higher National Minimum Wage 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 National Insurance contributions (NICs) (either employer or employee NICs). 


Some employers are reported to encourage 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, since these all depend on NICs. 


Wages under this kind of system also depend on tips being paid by customers, and are not guaranteed. Tronc abuses have been identified across the hospitality sector. Unite says that HMRC seem “oblivious” to this development. 


As Law at Work goes to press, Unite is balloting members at restaurant chain TGI Fridays for industrial action over the chain's plan to distribute service charge payments in lieu of a pay rise, the first UK strike action over restaurant tipping abuses.