The tronc tax dodge
Many restaurants use a so-called tronc scheme – a sort of electronic way of sharing tips.
When run independently by an outside tronc company, this saves on National Insurance payments.
As one of the biggest players, WMT Troncmaster explains: “This reduces the tax paid by both the employer and employee by over 25%.”
But some employers have been cutting pay and making up the difference to the employees through the tronc to cut their tax bill.
It’s true that the workers will also pay less National Insurance, but this will adversely affect legal rights, such as redundancy pay and their state pension.
Unite the Union says troncs are being used by employers “to drive down wages and save large sums of money in tax”.
One venue accused of using this tactic is the posh London private Devonshire Club (membership fee £2,400 per year), partly owned by Tory donor Lord Ashcroft.
Staff were asked to take a pay cut in exchange for a share of the service charge via a tronc. But the amount paid can’t be guaranteed as it is dependent on the tips left by diners.
A spokesman for the club, which describes itself as “unashamedly high-end”, said: “We don’t wish to add any further comment at this time.”