New Distribution of Tips (Tronc) Laws – All You Need to Know!

24 Sep 2024 | Food & beverage, Restaurants, SMEs, Technical Tips, Uncategorized

Distribution of tips is a great way for Food & Beverage (F&B) businesses to increase staff retention and boost profits, helping to address one of the sector’s most pressing challenges: Staff Shortages. Effective from 1st October 2024, the UK tipping law changes are particularly important for F&B businesses to maintain these benefits.

Below, we outline the key changes, their impact, and steps to navigate them easily.

KEY CHANGES
  1. 100% of Tips Go to Workers
    • All tips, gratuities, and service charges (cash, card, or non-monetary) must be given in full to staff.
    • Employers can no longer deduct costs like card processing fees, breakages, or Troncmaster fees. Only taxes and National Insurance (NI) contributions are deductible.
  2. Qualifying Tips and Workers
    • Includes all tips collected or controlled by the employer.
    • Applies to full-time, part-time, zero-hour, and agency workers, but excludes the self-employed.
  3. Fair and Transparent Distribution
    • Businesses must maintain a written policy, accessible to all workers.
    • Tips must be distributed by the end of the month following the month they were collected.
    • Distribution should follow objective criteria (e.g., job role, seniority, hours worked).
    • Workers can receive tips only from the specific location they worked at, with exceptions for head office or central kitchen staff.
  4. Record Keeping & Compliance
    • Businesses must keep detailed records of all tip collections and distributions for at least three years.
    • Employees can request to view their tipping records, limited to one request every three months.

 

IMPACT ON F&B BUSINESSES

These new rules will directly affect F&B businesses in several ways:

  1. Cash Flow: Businesses must ensure timely tip distribution without disrupting cash flow, which may be harder for smaller establishments.
  2. Additional Costs: New costs will arise under the new laws, as tips can no longer cover expenses like card fees.
  3. Wage Pressure & Staff Retention: New tips allocation rules may pressure F&B businesses to raise base wages, especially where tips previously supplemented lower wages.
  4. Administrative & Compliance Burden: Managing records and handling worker requests will increase administrative and compliance workload.

 

HOW TO NAVIGATE THESE CHANGES

While these changes promote fairness and transparency, they will also introduce operational complexity and increase costs for F&B businesses. To navigate these new laws effectively, you should:

  1. Set Up a Compliant System
  2. Create Written Policies
  3. Implement Regular Reviews
  4. Maintain Accurate Records

 

HOW WE CAN HELP

As Food & Beverage business specialists, we understand the intricate details of F&B operations and the challenges these changes may present. With our expertise in the Tronc System, we can help you:

  • Navigate these legal changes smoothly.
  • Optimize your tip management for cost and tax efficiency.
  • Boost your reputation with customers and improve staff retention.

 

Our team is ready to support your business through this transition, ensuring that you not only comply with the law but also turn these changes into an Opportunity to Strengthen Your F&B Business.

 

Click here to schedule a complimentary call with F&B specialist.