In response to The Employment (Allocation of Tips) Act 2023, we have developed new functionality to support our users with maintaining compliance and promoting transparency though improved reporting relating to TRONC.
Tronc Overview
Tronc is a method of allocating tips to the employees of a business. S4labour helps with this allocation. S4labour can allocate tips either on a daily or weekly basis according to the weighting of each employee and the hours worked. This is managed by the troncmaster, responsible for the allocation and distribution of tips.
Daily: If tronc settings are assigned daily, they are calculated by S4labour based on the tronc received for each particular day individually and summed up with a total figure displayed within the Extra Pay widget.
Weekly: When tronc settings are assigned weekly, S4labour calculates tronc for each employee based on the total tronc received for the week and uses all hours for the week with a total figure displayed within the Extra Pay widget.
Extra Pay Workbook Update
To support compliance with Tronc legislation, we have added the ability to specify the different types of tronc received when recording tronc within the "Extra Pay" workbook.
The different types of tronc are:
• Service charge
• Tips
• Cash tips
Head Office Allocation Settings
S4labour can now support greater transparency in how businesses allocate tips to the Head Office team. This is accomplished through the recording of deductions made to tips received at a site level. This clearly marks these sums as being allocated to Head Office Staff ("HOS Allocation").
The deduction is recorded within S4labour for transparency purposes, but the actual allocation of tips to Head Office staff is carried out outside of S4labour.
If this setting is switched on, the ‘HOS Allocation’ line will be listed within the Extra Pay workbook for each of your sites.
Users should enter the amount to be deducted in the ‘HOS Allocation’ line, this will then record the deduction and reduce the tronc available for distribution at a site level.
This functionality is an organisational setting that can only be used after we have enabled it. Contact your Account Manager and we can arrange to switch this feature on for your organisation.
Tronc Output Report
The Tronc Output report can be accessed within the Extra Pay workbook by clicking a print icon found in the top left corner of the workbook (This icon will only be visible for level 3+ users). Clicking the print icon opens a date range selection; the date will default to the week currently being viewed.
Click print to download the tronc report as an excel file.
The report will contain the columns shown in the below screenshot and will include data for all locations allocated to your user profile, ordered by date.
Government Guidelines on Tronc Allocation:
The responsibility for calculating NICs and making payments to HMRC rests on the employer. The below chart highlights when employers must pay National Insurance contributions to remain in line with government guidelines.
A link to the legislation regarding allocation of tips can be found here.
A copy of the code of practise can be found here
How is this rule calculated?
1.1 Every staff member has a value assigned to them.
1.2 This is known as a tronc point, the higher the tronc point the more tips received.
1.3 Tronc points are multiplied by their hours worked, either daily or weekly, to give each employee a tronc value.
1.4 All the tronc values are added up.
1.5 The total tips/CC from the week/daily are divided by the addition of every employees' tronc value to give the index value.
1.6 The indexed value is then multiplied back through by each employee’s tronc value to calculate the tips allocated to each employee.
Example
1. Add up every employees tronc values
Emp1+Emp2+Emp3
20+20+60= 100
2. Divide the tips for the week by the addition of all the employees tronc values.
1000/100 = 10 (index value)
3. To find out each employee’s tronc pay:
- Tronc value multiplied by the Index value = Tronc pay
- Emp 1: 20 x 10 = £200
- Emp 2: 20 x 10 = £200
- Emp 3: 60 x 10 = £600
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