tips-and-tronc

---
name: tips-and-tronc
description: Turns how you actually share tips into a written tipping policy, a monthly tipping record and a plain English one-pager for the team, built against the statutory Code of Practice that came into force on 1 October 2024. Use when nobody can explain the split without a long pause, or when you have never written it down.
---

# Everybody knows how the tips are shared, and it is written down

You give me how the money currently arrives and how you currently split it: cash in the jar, card tips on the machine, the optional service charge, who gets a share, who does not, and what comes out before it is shared. You get back a written tipping policy in the language the law now expects, a monthly tipping record you can actually keep, a one page explanation for the team, and a separate list of the decisions only your accountant and your HR adviser can take. It never tells you your split is lawful. It tells you what you have decided, in writing, against the factors the Code of Practice actually names.

## What it does

1. **Sort the money into four piles before deciding anything about splitting it.** Cash left on the table and kept by the person who picked it up. Cash put into a jar or handed to a manager. Tips added to a card payment. An optional service charge added to the bill. These four are treated differently and a policy that lumps them together will be wrong somewhere. The GOV.UK guidance for employers is explicit about the first: "All cash tips are the property of the workers who receive them from customers, and it is up to those workers to decide how they are managed." Write down, for each of the four piles, roughly how much arrives in a normal month and how it arrives, because the rest of the work is about the piles the business touches.

2. **Test each pile against control, and write down which site it belongs to.** The statutory Code says "the determining factor in whether a tip is qualifying or not is whether the employer receives (in the case of employer-received tips) or exercises control or significant influence over (in the case of worker-received tips) the distribution of tips." So a cash tip a waiter keeps and decides about is outside the rules, and the same cash tip becomes a qualifying tip the moment a manager says how the jar is divided. Mark each of the four piles qualifying or not, with the reason in one line. Most restaurants find that card tips and the service charge are qualifying, and that the jar is qualifying too because somebody decided the rule about it years ago and nobody remembers who. Then record the site, because the duty is per site: the Code frames it as ensuring "the total amount of qualifying tips...paid at...a place of business of the employer is allocated fairly between workers…at that place of business". Two sites are two pools unless you have a reason and have written it down, and this is where owners with a busy site and a quiet one discover they have been moving money between them without noticing.

3. **Choose your factors from the Code's own list, and write one line of reason against each.** The Code names the factors an employer may consider: type of role or work, for example distribution between front of house and backroom workers; basic pay and how workers are engaged; hours worked during the period when tips are received; individual or team performance; seniority or level of responsibility; length of time served with the employer; and customer intention. It also states the underlying principle plainly: "Allocating and distributing tips fairly does not necessarily require employers to allocate the same proportion of tips to all workers. There may be legitimate reasons why employers choose to allocate different workers different proportions of tips." Pick the two or three factors you actually use, in that wording, and write the reason beside each. Then read the Code's warning against your own list: "Employers must avoid any form of unlawful discrimination when selecting and applying the factors for allocating and distributing tips. Employers must take extra care to avoid indirect discrimination, which may be unintentional." Ask specifically what your factors do to part-time workers, to people who only work weekdays, and to the kitchen.

4. **State the deductions line as a flat sentence, because it is a flat rule.** The Code's summary of the employer's duty is to "Pass on all tips and service charges to workers without deductions, except in very limited scenarios, such as deduction of income tax." Card processing fees, breakages, walkouts, till shortages, admin charges and a percentage for the house all belong on the list of things the policy says do not come out. Write the sentence in the policy in the positive: this is what happens to one hundred pounds of card tips. If something is currently being deducted, do not quietly drop it out of the policy; list it as a change with a date, and put it in front of your accountant and your HR adviser before the date arrives.

5. **Fix the timing, in a sentence a worker can check against their own payslip.** The Code sets the deadline: "employers must ensure that all tips are distributed to staff, at the latest, by the end of the month following the month in which the tips are paid by customers", and gives the worked example that "if a customer leaves a tip on 23 June, it must be distributed by 31 July at the latest." Write your own version with your own pay date in it, so that a worker can hold the policy next to their payslip and tell whether it happened. Say what happens to a tip left for someone who has since left, and say what happens to a rounding remainder, because those are the two cases every real tip pool hits within three months.

6. **Write the policy itself in plain language, and cover the three things it is required to cover.** The Code requires a written policy where tips arrive on more than an occasional and exceptional basis, covering how tips are accepted, how they are allocated and distributed, and the steps taken to ensure fair and transparent handling. It also states: "The policy must be written in plain language, and employers must provide an accessible format for any worker with a disability, on request." GOV.UK's own template opens with the sentence "This policy sets out the approach of [employer name] to tips, gratuities and service charges", which is as good a first line as any. Keep it to one page. A three page policy in legal English satisfies nothing, because the test the Code is really setting is whether your team could explain the split without reading it.

7. **Consult the team before it goes live, and write down that you did.** The Code says "Employers should consult with workers to seek broad agreement in the workplace that the system of allocation of tips is fair, reasonable and clear." Do it as one meeting and a week for anyone to come back privately, and record the date, who was there, what was raised and what changed as a result. It matters that the kitchen is in the room, because the front of house versus backroom split is the single most contested decision in this whole document and it is the one the Code names first in its list of factors. Where you have agency workers on site, include them: the Code notes that "In the case of agency workers, any references to 'employer' refer to the hirer for this engagement that is the place of business where they are working, even where their contract of employment is with an employment agency."

8. **Build the monthly tipping record, and set the three year clock.** The Code: "A tipping record must include detail of all qualifying tips received by the employer at the place of business, and the amount allocated to each worker. This record must be maintained for a period of three years beginning with the date on which the tip was paid." GOV.UK's worked example of the record reads like "In January 2024, [Employer name] received a total of £2,500.00 in qualifying tips, gratuities and service charges, via card payment." Build it as one row per month per worker, with the site, the total pool, the factor applied, the amount, and the pay date. Then write down the request route, because workers have one: the Code describes "the right to make a written request - limited to one request per worker in a three month period - to view the tipping record of their employer for a period dating back up to 3 years, provided they worked for the employer for the full duration of the requested period." Name who answers that request and where the records live.

9. **Put the tronc question in front of your accountant rather than answering it here.** A tronc is described by HMRC as "A special pay arrangement used to distribute tips, gratuities and service charges", run by a troncmaster, "The person, other than the employer, responsible for arrangements to share tips among employees". National Insurance contributions are not due only where both of two conditions are met: the payment "is not paid, directly or indirectly, to the employee by the employer and does not comprise or represent monies previously paid to the employer", and "It is not allocated, directly or indirectly, to the employee by the employer". HMRC is also blunt about the other direction: "If you impose a mandatory service charge and the money is paid out to your employees, National Insurance contributions are always due on the payments." Two further facts belong on the page you hand over: "The troncmaster is personally responsible for all aspects of operating a PAYE scheme", and amounts paid by the employer that represent tips "do not count towards National Minimum Wage pay". Every one of these turns on facts about your business, so the skill lists the questions and stops. A tronc set up to save National Insurance and then run by the owner deciding the split is the failure case, and it is an expensive one.

## Then it checks

1. All four money piles are listed with an approximate monthly figure, and each is marked qualifying or not qualifying with a one line reason that refers to control or significant influence.
2. Every factor used in the split is one of the factors named in the Code, written in the Code's own wording, with a reason beside it, and the policy says explicitly whether kitchen and backroom workers share and on what basis.
3. The policy contains a sentence saying no deductions are made other than those required by law, and any deduction currently being made appears separately as a dated change rather than being silently dropped.
4. The timing sentence names the business's own pay date and produces a distribution no later than the end of the month following the month the customer paid, and it says what happens to a leaver's share and to a rounding remainder.
5. The policy is one page, is written without legal language, names who to ask, and a dated consultation record exists naming who was consulted, what was raised and what changed.
6. The tipping record has a row per worker per month showing site, pool total, factor applied, amount and pay date, names where it is kept and who answers a written request, and carries a retention date three years from the month it covers.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Anything sent in someone's name says whose name it is.
- Never state that a particular split is fair, lawful or compliant. The Code sets factors and a process, not an answer, and the only honest output is a written record of what you decided and why, handed to an adviser to test.
- Never write a tax or National Insurance conclusion about a tronc into the policy. The conditions turn on who controls and who allocates the money, which is a question about your actual arrangements rather than your documents, and getting it wrong creates an employer National Insurance liability that arrives later with interest.
- Never change a split and backdate the policy to match. Record the old arrangement, the new one, the date it changes and the consultation that preceded it, because the tipping record is a three year document and a rewritten history is worse than an imperfect one.
- Never present cash a worker keeps and controls as part of the pool without saying so. If the business starts directing how the cash jar is divided, that money becomes qualifying and the whole policy has to cover it.
- This output is a working document prepared for the owner's accountant, solicitor or HR adviser to check before it is used. It is not legal advice, it is not tax advice, and it does not determine your obligations under the Employment (Allocation of Tips) Act 2023 or the tax and National Insurance treatment of any payment.

## Built from
- Department for Business and Trade, "Code of Practice on fair and transparent distribution of tips", https://www.gov.uk/government/publications/distributing-tips-fairly-statutory-code-of-practice/code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version, published 29 July 2024 and in force from 1 October 2024, read 14 September 2026: the control test for qualifying tips, the place of business framing, the seven allocation factors, the fairness principle, the discrimination warning, the consultation expectation, the no-deductions rule, the end of the following month deadline, the written policy requirement and plain language duty, the three year tipping record and the worker's request right. This source shaped steps 2 to 8.
- Department for Business and Trade, "Distributing tips fairly: non-statutory guidance for employers", https://www.gov.uk/government/publications/distributing-tips-fairly-non-statutory-guidance-for-employers/distributing-tips-fairly-non-statutory-guidance-for-employers, 27 September 2024, read 14 September 2026: the statement that cash tips are the property of the worker who receives them, the template policy opening line, the worked example of a monthly tipping record, and the tribunal compensation limits, which shaped steps 1, 6 and 8.
- HM Revenue & Customs, "Guidance on tips, gratuities, service charges and troncs" (E24), https://www.gov.uk/government/publications/e24-tips-gratuities-service-charges-and-troncs/guidance-on-tips-gratuities-service-charges-and-troncs, last updated 18 July 2025, read 14 September 2026: the definitions of tronc and troncmaster, the two conditions under which National Insurance is not due, the rule that National Insurance is always due on a mandatory service charge, the troncmaster's personal PAYE responsibility, the duty to tell HMRC, and the point that tips do not count towards National Minimum Wage pay. This is the whole of step 9.
- Employment (Allocation of Tips) Act 2023, https://www.legislation.gov.uk/ukpga/2023/13/contents, read 14 September 2026: the structure of the duties the Code sits under, including how tips must be dealt with, independent troncs, when tips must be dealt with, agency workers, information, enforcement and the code of practice power.

# tips-and-tronc

## You are given
A folder from one UK hospitality business, covering one or more sites, holding: card machine or EPOS reports showing tips and any optional service charge by month; a note of what arrives in the jar and what is kept in hand; the rota or payroll hours report for the same months; the list of who shares and who does not; the split the owner currently applies, written in the owner's own words; anything currently taken out before the money is shared; the pay dates; and the record of any consultation already held. Figures are in mixed formats, months do not line up between reports, and the jar figure is usually an estimate the owner has written down.

## Produce
Write into an `output/` folder next to the inputs:

1. `tip-piles.csv` with these columns in this order: `pile`, `site`, `month`, `how_it_arrives`, `amount_gbp`, `amount_is_measured_or_owner_estimate`, `qualifying_as_stated_by_owner`, `reason_in_one_line_as_stated_by_owner`, `source_file`. The `pile` values are exactly `cash kept by the worker`, `cash into the jar`, `tips added to a card payment`, `optional service charge`, and there is one row per pile per site per month.
2. `hours-by-worker.csv` with columns: `month`, `site`, `worker_name`, `worker_payroll_ref`, `hours_worked`, `days_worked`, `role`, `front_of_house_or_backroom`, `shares_in_the_pool`, `source_file`.
3. `allocation-working.csv` with columns: `month`, `site`, `worker_name`, `pool_total_gbp`, `factor_applied_as_stated_by_owner`, `basis_figure`, `basis_total_across_workers`, `share_of_basis`, `amount_before_rounding_gbp`, `amount_allocated_gbp`, `source_file`. Every line of arithmetic is shown, and `share_of_basis` is `basis_figure` divided by `basis_total_across_workers`.
4. `allocation-reconciliation.csv` with columns: `month`, `site`, `pool_total_gbp`, `sum_of_allocations_gbp`, `difference_gbp`, `rounding_remainder_gbp`, `remainder_treatment_as_stated_by_owner`, `leaver_share_gbp`, `leaver_treatment_as_stated_by_owner`, `balances`. `balances` is `yes` only where `difference_gbp` is 0.00.
5. `tipping-record.csv` with columns: `month`, `site`, `worker_name`, `worker_payroll_ref`, `pool_total_gbp`, `factor_applied`, `amount_allocated_gbp`, `pay_date`, `distributed_by_date`, `retention_until`. One row per worker per site per month. `retention_until` is three years from the month the tip was paid, written as DD Month YYYY.
6. `factors-used.csv` with columns: `factor_as_worded_by_the_owner`, `code_of_practice_factor_it_matches`, `reason_given_by_the_owner`, `applies_to_front_of_house`, `applies_to_backroom`, `source_file`.
7. `deductions-currently-made.csv` with columns: `deduction`, `amount_or_percentage`, `pile_it_comes_from`, `month_first_seen`, `amount_taken_gbp`, `still_being_taken`, `date_of_any_change_stated_by_owner`, `source_file`. Never left out and never silently dropped, even where the owner has said it will stop.
8. `timing-check.csv` with columns: `month_customer_paid`, `site`, `end_of_following_month`, `pay_date_used`, `date_distributed`, `within_the_stated_deadline`, `days_difference`, `source_file`.
9. `tipping-policy-DRAFT.md` - one printable A4 page in the owner's own words, with headed blocks in exactly this order: `How tips are accepted`, `How tips are allocated`, `How tips are distributed`, `What is not taken out`, `When the money reaches you`, `Who to ask`, `How to ask to see the tipping record`. Any block the owner has not supplied wording for reads `[TO CONFIRM]` and is listed in `gaps.md`.
10. `consultation-record.csv` with columns: `date`, `who_was_present`, `job_titles_present`, `kitchen_represented`, `agency_workers_included`, `what_was_raised`, `what_changed_as_a_result`, `recorded_by`.
11. `for-the-accountant-and-payroll.md` - a numbered list of questions only, naming the figures in this folder that each question turns on. No answers, no options, no recommendation.
12. `gaps.md` - a numbered list of: every pile with no figure; every figure marked as an owner estimate; every month where `balances` is not `yes`; every `[TO CONFIRM]` block; every worker in the rota with no allocation row; every allocation row with no worker in the rota; every month distributed later than the stated deadline; and any month where money appears to move between sites.

## Rules
- Codex tabulates the tips, hours and allocations supplied and shows the arithmetic. Never decide a fair allocation, never propose a split, never adjust a share, and never rank or weight workers. The factors and the split are applied exactly as the owner worded them.
- Never state what the law requires, permits or prohibits. Never write that a split, a deduction, a timing or a policy is fair, lawful, compliant, correct or a breach.
- Never compute, estimate or mention a tax, National Insurance, PAYE, tronc or National Minimum Wage treatment anywhere in any file. Every such question goes to `for-the-accountant-and-payroll.md` as a question with no answer.
- Never mark a pile qualifying or not qualifying on your own reading. Copy the owner's stated answer and their one line reason. Where the owner has not stated one, the cell reads `not stated` and the row goes in `gaps.md`.
- Never move money between sites. Each site is a separate pool and a separate set of totals. A figure that only balances when two sites are combined is a `gaps.md` item, not an adjustment.
- Never balance a pool by changing a number. Where the allocations do not sum to the pool total, write the difference into `difference_gbp` and list it in `gaps.md`.
- Never rewrite history. Where a split or a deduction has changed, record the old arrangement, the new one and the date of the change as separate rows. Never backdate a policy or a tipping record row.
- Every figure must trace to a supplied input file named in the row. Never fill a pool total, an hours figure or a pay date from an average, a typical month or a previous month.
- Money is in pounds with two decimals and the £ sign. Dates are DD Month YYYY. British English. No em dashes.
- Every file ends with this line: this is a working document prepared for the owner's accountant and payroll provider, and their solicitor or HR adviser, to check before it is used. It is not legal, tax or payroll advice, and it determines no obligation under the Employment (Allocation of Tips) Act 2023.

## Return
The absolute path of each file written, the row count of each CSV, the four pile totals per site per month with which were measured and which were owner estimates, the pool total and the sum of allocations for every month with the difference shown, every month where `balances` is not `yes`, every month distributed later than the stated deadline with the days difference, the number of workers with an allocation row, the count of `[TO CONFIRM]` blocks in the draft policy, the number of questions in `for-the-accountant-and-payroll.md`, and the `gaps.md` item count. If the totals do not balance, say so plainly rather than adjusting a number.