Tronc is a term for a special pay arrangement that is used to distribute staff tips, gratuities and service charges in businesses such as bars, restaurants, hotels or casios.

The word tronc originates from the French phrase ‘tronc des pauvres’, which translates as ‘collection box’.

Tips, gratuities and service charges paid via a tronc may mean that they are exempt from National Insurance contributions (NICs). Legislation states that any amount paid to an employee which is “the payment of a gratuity” or “in respect of a gratuity” is exempt from NIC’s if:

• It is not paid directly or indirectly to the employee by the employer and does not comprise or represent monies previously paid to an employer;
• It is not allocated directly or indirectly to the employee by the employer.

In most cases if a business passes a tip to an employee the business is responsible for NICs because neither of the above two conditions are met. This is where a tronc becomes useful.