Hidden costs of outdated tipping: How business owners are losing revenue

In today’s hospitality landscape, tipping has become the business owners’ problem. It directly impacts your bottom line. Recent legislation brings new levels of liability around tipping that as an industry we have not seen before. With rising operating costs, fierce competition for talent, and increasing regulatory scrutiny, the way tips are handled can significantly impact profitability, compliance, and staff turnover.

Cash tips are always ideal, however the second a tip goes through your point of sale system, the issue begins. Gratuities and service charges that are digitally collected are exposing businesses to an unnecessary 15% employer NICs on this income, as well as legal liabilities of up to £5,000 per employee. The larger your operation, the higher the costs and compliance risks associated with tipping become.

Automate the tipping process

There is a solution to this issue for businesses of all sizes. JustTip is a digital tipping and tronc solution that automates the tipping process for hospitality businesses. This eliminates unnecessary National Insurance Contributions (NICs) from tips, as well as financial penalties for legal non-compliance.

What is one of the clearest financial benefits savings? Saving 15% on NICs for employers and up to 8% for employees. This is an unnecessary expense for both employers and staff. Digital Tronc systems, when structured correctly and in full compliance with HMRC, legally bypass this cost by distributing tips directly to employees, outside of payroll. For high-volume venues or multi-site groups, this can unlock tens of thousands of pounds in annual savings.

An easy way to manage tronc

The savings don’t stop there. JustTip’s tronc solution also keeps businesses aligned with the Employment (Allocation of Tips) Act 2023, eliminating financial liability that comes with non-compliance. End-to-end transaction reports, fair distribution, and full transparency are all required under the new act, all of which JustTip’s tronc solution provides for its users.

The system runs on a 30-day rolling subscription and is built for businesses of all sizes from independent SMEs to international hospitality groups offering flexibility, scalability, and full compliance from day one as the most affordable business solution on the market.