Why getting tips and Tronc right in 2026 matters more than ever
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2025 was a challenging year for hospitality. Operators navigated rising living costs, cautious consumer spending, and the ongoing pressure of maintaining margins in a cost-heavy environment.
Yet, as the festive season proved, the sector remains resilient, supported by teams who continue to deliver great guest experiences despite the headwinds.
One issue that has rapidly grown in importance is the management of tips and tronc. Fair distribution isn’t just a matter of legislative compliance; it increasingly shapes team morale, retention, and even the customer experience.
Why tips and Tronc remain a priority for operators
Across the industry, businesses are reassessing how they manage discretionary service payments, not only to stay compliant, but to ensure team members feel valued and fairly rewarded.
Here are some of the key considerations for 2026:
- 1
The Employment (Allocation of Tips) Act: A New Operational Standard
The Employment (Allocation of Tips) Act has now been in effect for over a year, and the expectations are clear: transparency and accurate distribution are no longer optional.
With increasing visibility from regulators and employees, operators are prioritising systems and processes that give staff confidence in how tips are handled. The cost of non-compliance, both reputational and financial, means this is now a board-level priority for many hospitality groups.
- 2
Holiday Pay and Tronc: A Tribunal with Sector-Wide Implications
An ongoing tribunal is examining whether tronc payments processed through the same PAYE systems, payslip and payroll could be considered “wage-like” and therefore attract holiday pay obligations.
If this interpretation is upheld, the potential financial impact for operators, particularly single-site businesses, could be significant. Early estimates suggest additional costs in the region of £10,000 or more per year for some models.
- 3
Employee Expectations: Visibility, Fairness, and Trust
Workforces are increasingly seeking transparency around pay. Clear, accessible information about how tips are distributed can help build trust and engagement, particularly among hourly-paid teams who rely on variable income to manage rising living costs.
Beyond payment alone, many employers are exploring ways to support staff with financial wellbeing, from budgeting tools to accessible saving mechanisms, recognising the wider role these initiatives play in retention and job satisfaction.
- 4
The decline of cash: Rethinking the guest tipping experience
As cash usage continues to fall, many operators worry that spontaneous guest generosity could decline with it. This shift has accelerated interest in digital tipping methods that mirror the immediacy of cash while offering clearer visibility and easier reconciliation.
QR-based tipping, contactless options, and automated reporting have all grown in adoption, helping ensure teams don’t lose out as guests move towards fully cashless behaviour.
What the data shows
Across the sector, businesses that invest in transparent, well-managed tipping systems report a variety of positive outcomes, including:
- Significant increases in positive guest feedback directed at team members
- Notable savings on National Insurance contributions through efficient tronc structures
- Clear improvements in staff satisfaction and retention
- Commercial uplifts, such as like-for-like sales increases, linked to higher team engagement
Looking ahead to 2026
As operators plan for the year ahead, the conversation around tips and tronc is shifting. What once felt like a back-office task is now firmly connected to wider operational priorities: compliance, culture, retention, and financial resilience.
One thing is clear: when teams feel valued and fairly rewarded, the benefits ripple across the entire business, from guest experience to commercial performance. With continued regulatory change and evolving employee expectations, getting this right will remain essential for a thriving, sustainable hospitality sector.