There are over 150,000 businesses where tipping is a common part of being in operation in the UK with the typical discretionary payment made by customers being 12.5% of their bill.
The UK restaurant and café industry was worth £87.96 billion in 2017. With tipping representing approximately £11 billion of this market value, this a significant sum of money that has salary cost savings potential.
Many employers choose to pay tips directly through payroll but often such payments are treated as salary and employees receive their tips net of tax and NICs.
To incentivise the fair and transparent distribution of tips to employees, there is an alternative solution available to employers through the administration of a Tronc scheme which has the following benefits:
- Staff can have up to 100% ownership of their hard-earned tips with a voice in how they are shared out.
- Through the use of a Troncmaster, the scheme is genuinely independent, free from employer influence and administered for the benefit of staff.
- Payments made through an independent Troncmaster are not subject to NICs!
With employee NICs worth 12% and employer NICs worth 13.8% there is a huge potential to save over 25% of revenue made from tips through operation of a Tronc scheme.
That’s approximately £2.8 billion worth of tips in 2017 that should have been saved if they were treated efficiently through a Tronc scheme! It goes without saying that there is potential to unlock huge salary cost savings through the administration of a Tronc scheme.