About Paperchase

Paperchase is the leading global hospitality accounting firm. For over 35 years, Paperchase has provided bookkeeping and financial advising to restaurants that drive profitability.Founded in London, the firm now has a global footprint, serving over 3,000 restaurants worldwide. Paperchase’s teams ensure smooth day-to-day financial operations and provide management with the comprehensive, timely, and accurate reporting they need to make key decisions that allow a business to thrive. Whether you’re running a large group of fast-casual eateries, a single-location Michelin-star restaurant, or anything in between, Paperchase supports teams of all sizes with time-tested processes and reporting. To learn how we can help your business, click here.

Employment (Allocation of Tips) Act 2023

To keep wages fair and honest, the UK government has passed the Employment (Allocation of Tips) Act 2023, also known as tronc legislation. Tronc schemes are used to pool and distribute tips, gratuities, and service charges among hospitality industry employees, but they have faced scrutiny for their history of inequitable distribution, leading to legal accountability. The new legislation, which goes into effect on October 1, 2024, enforces the distribution of 100% of tips and service fees to employees. Peter Davies, a troncmaster at WMT, summarizes the primary effect of the legislation: “Consumers and workers will now know that the money their guests pay will principally go to the team. Businesses are not allowed to keep any of the money for any reason. This will give teams more visibility and transparency over their pay.”

Legislation Summary

New Tronc Legislation

Previously, some restaurants would retain 20-30% of their tronc value to cover business expenses, including taxes, breakage, and even staff parties. The Employment (Allocation of Tips) Act prevents the retention of tips or service charges for any reason. The act states that transparent, written guidelines must be distributed to employees outlining the protocol of the system. In addition to a written manual of distribution, employers will be required to provide a record of all tips to their staff, which includes the specific allocation and distribution amount for each employee. To maintain visibility and compliance with the act, workers can dispute their tips in the Employment Tribunal if their employer fails to maintain the required records or refuses a request. Employment tribunals can change employer recommendations, make orders to repay workers, and issue compensatory awards.

Tips must be distributed to workers by the end of the subsequent calendar month. For example, if tips were collected in August, they would be distributed by the end of September. The Employment Act outlines tips and service charges distributed by credit card but does not account for cash tips unless they are collected in a scenario where an employer “exercises control,” such as through a cash pool. Additionally, the law states that all tips and service fees must stay within the individual establishment and cannot be shared between locations. Within these single establishments, the only deductions that can be taken from the tronc are income taxes instituted by the government.

Section 27H of the new regulation is changing the way establishments view their agency workers. Previously, agency workers were unable to receive tronc because they were not factored into a business’s payroll, but this addendum gives these employees the right to receive an allocated share of tips on the same basis as regular payroll employees. These workers cannot receive a lower share of the tronc because of their affiliation with an agency. Employers will be required to pay the agency directly, and that money will be allocated to the employee. Because the share of tips must be consistent between all workers, some argue about the practicality of this part of the bill, as it may result in agency employees receiving disproportionately higher earnings than directly employed staff.

A tronc scheme can be a useful tool to improve staff motivation and retain employees, in addition to offering a plethora of financial benefits. Businesses that use tronc can maintain exemptions from National Insurance contributions, saving money for both the employer and employee. For example, pooled tips of £20,000 a month could save £2,760 per month in the employers’ National Insurance if processed through a tronc. Compliance with the new legislation is paramount to preserving these employee benefits. In cases where an independent tronc arrangement is in place, there’s an automatic assumption of fairness. Adherence to a valid independent tronc system will fulfill an employer’s legal obligations and maintain the assumption of fairness.

Accounting for Tronc

A primary concern for many business owners is the potential impact of this new legislation on payroll and profit-and-loss statements. Collaborating with hospitality accountants like Paperchase can provide operators with valuable insights into these areas, enabling them to optimize financial performance in the face of regulatory changes. Your restaurant accountant should conduct a thorough review of your payroll records to determine the total tronc collected during each pay period. This information is then used to calculate the troncmaster allocation and distribute funds to employees based on predetermined percentages. These percentages may be subject to adjustment considering the new bill.

The tronc value sits on a separate line in a balance sheet, as it is a unique account. Each month, the tronc balance should be null, but this can differ if employers choose not to pay the full amount monthly. In the case of a balance, the tronc amount will act as a credit. Business owners must work with their bookkeepers to review the tronc line on their P&L in the wake of the October 2024 regulation. Operators who previously used retained tronc value to pay extra expenses will have to allocate these funds from elsewhere. To make up for lost money, restaurant owners may lower their service fees but raise menu prices, resulting in increased revenue for the business as money from the service fee goes directly to the worker. For example, if the standard service fee is lowered from 12% to 10% but the operator increases their prices, more money will go to the business.

How to Prepare

To stay prepared for the upcoming regulatory changes, owners and managers should carefully review their current tip policies. Assess the percentage of tips distributed to each employee and identify any disparities between roles. Implement a clear, written policy well in advance, allowing staff to familiarize themselves with the changes before they take effect. Restauranteurs should collaborate with their hospitality accounting teams to analyze existing tip allocation records and establish a structured system for tracking these metrics. Once records have been updated, owners should properly train their staff to handle operations under the new bill. Ensure your managers understand how to maintain compliant tip and payroll reporting after October 1.

Conclusion

The UK’s upcoming Employment (Allocation of Tips) Act of 2023 marks a significant step toward greater transparency and fairness in the hospitality industry. By mandating the full distribution of tips and service charges to employees, the new legislation aims to address concerns about the potential for tip withholding and ensure that all staff members receive a fair share of their earnings. However, implementing these changes will require careful preparation and adjustment on the part of business owners.

While the act provides clear guidelines, businesses must review their existing tip policies, establish transparent distribution procedures, and work closely with their accountants to understand the financial implications. By complying with the new legislation and leveraging the expertise of hospitality experts like Paperchase, businesses can not only maintain their compliance but also capitalize on the potential benefits of a well-managed tronc scheme.

UAE hotels are known worldwide for their high-end service, lavish amenities, and robust tourist sector. However, handling this business’s finances is challenging behind the scenes.

VAT and service costs are crucial. All companies in this industry must understand how these pieces function.

Proper financial management ensures a company follows value-added tax and service charge laws and maximises profits.

Understanding VAT in the UAE Hospitality Sector

VAT, or consumption tax, began in the UAE on January 1, 2018. The VAT base rate is 5%. Taxes apply to most products and services, including hotel supplies. Businesses that offer accommodation, food, and beverages must pay VAT. These businesses include hotels, restaurants, and cafes.

Why is VAT Important?

The UAE aims to diversify its economy and reduce its dependence on oil money, including the value-added tax or VAT. Two key reasons hotel businesses must understand VAT:

How VAT Works in Hospitality

Companies that provide catering services often add VAT to their charge rates to consumers. For instance, clients’ pricing will include the 5% VAT when booking a hotel room or restaurant. The company then picks up this VAT and transmits it to the Federal Tax Authority (FTA).

It’s important to note that VAT is a tax on consumption. This suggests that corporations collect value-added taxes for the government while consumers are accountable. However, corporations must closely monitor and disclose tax infractions to ensure compliance.

Service Charges in the UAE Hospitality Industry

Service charges are yet another crucial part of the financial picture in UAE hotels. Companies that provide food and beverages—such as hotels, restaurants, and others—often include these fees on consumers’ bills to help with the running expenses of operations.

What are Service Charges?

The company will add a service charge to your bill—basically a percentage of the total. Usually, this amount covers additional expenses related to offering the service or paying staff members. Although particular numbers might vary from one UAE hotel to another, generally speaking, a rule of thumb is 10%.

How Service Charges Affect Pricing
Service charges influence the overall cost, much like a value-added tax. Including a service charge on a customer’s bill increases the whole amount they pay. Businesses must consider the cost of offering the service versus the impact on customer satisfaction. If your prices are too high, you risk losing customers; if they are too cheap, you risk going bankrupt.

Legal Considerations
Service charges have to abide by UAE regulations. Companies have to make sure consumers understand the prices of services. Usually, this is done by arranging them on tables or informing clients before they pay. VAT can also apply to service costs; thus, the VAT is included in the whole bill, including the service fee.

Financial Management of VAT and Service Charges

Being competent at money management is essential for handling VAT and service costs. Poor leadership can produce regulatory violations, penalties, and lower revenue.

Tracking and Accounting
Among the most crucial aspects of managing VAT and service charges is maintaining accurate records and tracking funds. Companies that provide hospitality must keep accurate records of all their activities, including VAT collected and service charges paid. This guarantees that, upon VAT tax filing, the data is accurate and complete.

Establishing robust financial systems that can handle VAT and service charges is rather crucial. These systems should be able to calculate VAT immediately, add service charges, and create records to simplify filing.

Pricing Strategies
Effective financial management depends critically on pricing. Businesses should know how VAT and service fees affect their pricing approach. Maintaining profitability and being competitive in the market must be balanced and important.

For instance, some companies can include VAT and service charges in their stated pricing to provide customers with openness. Others can add on these extra fees to keep basic expenses low. Every approach has pros and cons; the best depends on the specific business and customer base.

Staff Training
Furthermore, it is essential to ensure that staff members understand how VAT and service fees work. Employees should get instructions on adequately explaining these charges to customers and handle any questions or problems that could develop. Appropriate training helps avoid misunderstandings and assures customers feel informed and satisfied with their experience.

VAT Filing and Compliance

Running a hotel in the UAE requires following guidelines and submitting VAT returns. Usually, every three months, companies have to routinely submit VAT returns to the Federal Tax Authority (FTA).

Preparing VAT Returns
When you complete your VAT reports, you need to gather all of your financial data—including VAT paid on business expenses and VAT received on sales. The company qualifies for a refund or pays the FTA additional VAT depending on the difference between these figures.

Make sure all of the records are accurate and current before you file. If errors arise on your VAT records, you can be subject to inspections, penalties, and needless worry.

Staying Compliant
Following VAT rules doesn’t involve filing returns. Businesses must also retain at least five years of relevant documentation like invoices, receipts, and other VAT transaction records. Moreover, companies should be informed of VAT legislative changes to maintain compliance.

Regular audits and reviews help to identify VAT process issues in their early phases most effectively. Visit a tax professional or accountant specialising in value-added tax to be sure you comply.

Technology and Tools to Aid in VAT and Service Charges Management

Many tools and technologies are available to simplify the challenging VAT and service tax management procedure.

Accounting Software
Each hotel that uses modern accounting software can benefit greatly. These tools handle several VAT and service fee chores. These include tax calculations, service billing, and financial recordkeeping. This technology also reduces errors, saving time.

Hotel companies can select from many popular accounting packages. QuickBooks, Xero, and Zoho Books are examples. These systems’ hotel-specific capabilities allow hotels to manage VAT, service charges, and other finances.

Point of Sale (POS) Systems
A precise point-of-sale (POS) system is essential. At the point of sale, POS systems instantaneously calculate VAT and service fees. This function guarantees fair payment for transactions. These systems link to financial applications, making statistical data collection and reporting quicker.

Buying a hotel-specific POS system can change VAT and service charge management.

Expert Consultation
Working with financial specialists who understand the hotel industry is just as beneficial as using technological tools. These experts can assist with matters like VAT compliance, service fee management, and your overall financial strategy. They can also help file your VAT returns and ensure your company complies with all regulations.

Conclusion

Understanding and managing VAT and service charges can help you manage a profitable hotel in the UAE. Companies can ensure they meet VAT laws and maximise revenues by keeping current on VAT regulations, properly managing service fees, and using suitable tools.

Effective VAT and service charge financial management are avoiding penalties and strengthening the company’s financial situation. Long-term success in the very competitive hotel industry depends on these vital factors.

Regarding financial management, the hotel business, including restaurants, bars, pubs, and other establishments has depended on Paperchase for over 30 years. Paperchase Hospitality accountants is a fantastic option for companies seeking help with value-added tax (VAT), service charges, and other financial concerns. Trust our years of expertise help you achieve your financial goals with confidence.

A new law introduced in California will shift requirements for menu pricing in restaurants. Senate Bill 478 was introduced to promote “price transparency” and help consumers avoid hidden fees. The law, taking effect on July 1st, 2024, would require businesses to advertise all mandatory fees on their menu or website, the only exceptions being taxes or fees imposed by a government on the transaction or fees on delivery items placed directly from the restaurant. The primary goal of this bill is to provide consumers with clarity over surcharge pricing. Many establishments in California have implemented a 3% fee on all charges to account for increasing the minimum wage and higher costs. SB 478 would require this to be clearly outlined on a restaurant’s menu or posted in the business. The law is pushing restaurants to decide whether they want to advertise their mandatory fees or increase menu prices to supplement rising costs. In many cases, it can be useful to disclose raising prices to customers with the reason being higher labor costs or adding a healthcare plan for employees. The Department of Justice has created a Frequently Asked Questions page regarding the law.

One grey area of the law is automatic gratuity for restaurants. The Department of Justice’s FAQs questions disclose that via SB 478, “mandatory gratuity payments that are not voluntary must be included in the list price.” Although this is outlined in the law, the DOJ claimed they would not enforce SB 478 on mandatory tips at first. Although this focus may shift, mandatory gratuities often do not impose the same transparency issues that other service charges do. Mandatory gratuities are important to many restaurant owners because they provide wage protection for servers who work with large parties and events. This often includes a mandatory gratuity section with an optional section on top of that if the party wishes to add more to the charge. Failure to comply with these terms can result in significant legal action against businesses, including a minimum of $1,000 in class actions. Additionally, restitution, punitive damages, injunctive relief, and attorneys’ fees can all incur charges for the restaurant.

The law was introduced to protect consumers and many advocates are celebrating its passing. Some claim the law will allow customers to know the true price of a product up front so they can engage in comparison shopping, leading to strong competition in the marketplace. Despite positive consensus from consumers, many restaurateurs in California are worried that this will lead to an increase in prices overall and push customers away. Following the pandemic, people are spending less money at restaurants, and some owners claim this law will further add to the financial disparity between eating out and saving. Restaurant owners were forced to add surcharges after the pandemic to compete with rapidly changing labor and rent costs.

Additionally, other operators claim that the law is inconsistent in its implementation, leading to general confusion from owners. Despite mixed reactions, California’s SB 478 is gaining traction for transparent pricing across the US, with the federal government proposing a similar law. Other states, including Colorado and Pennsylvania, have drafted laws protecting hidden fees in businesses, but neither have earned final approval. Lawmakers claim the push for transparent pricing is a bipartisan issue.

Conclusion

California’s SB 478 marks a significant shift toward price transparency in the restaurant industry. While consumer advocates celebrate the ability to make informed decisions based on true costs, restaurant owners grapple with potential price increases and implementation confusion. The law’s impact on mandatory gratuities remains unclear, but it has undeniably sparked a national conversation about hidden fees and fair pricing in the service industry. With similar legislation proposed at the federal level and in other states, SB 478 could pave the way for a more transparent dining experience for consumers across the country.

After taking a critical hit during the COVID-19 pandemic, restaurants bounced back with the help of eased regulations around outdoor dining. New York City became a hub for makeshift patios on sidewalks and the street, embracing a Parisian café culture. This concept saved restaurants that were losing revenue by operating at half-capacity or less indoors. With the added tables, restaurants could continue to operate during the pandemic while still adhering to government regulations. Even as restrictions were lifted, outdoor dining has stuck around, giving businesses the ability to utilize space creatively and expand the footprint of limited NY real estate. Just as New York businesses began to thrive with the introduction of these spaces, a new law has is shaking things up.

During the pandemic, restaurants were granted temporary outdoor dining permits, but a new regulation, introduced by New York City Department of Transportation (NYC DOT) Commissioner Ydanis Rodriguez, is giving restauranteurs 60 days to apply for their new permanent outdoor dining program. Owners must apply by August 3rd, or completely remove their setups by that time. Any business that applied for a permanent permit may keep its outdoor dining setup until they are approved. Ydanis Rodriguez mentioned how the city is trying to make the approval process as easy as possible and claims “New Yorkers enjoy outdoor dining and the vibrancy it brings to our communities, and that is why we are proud that Dining Out NYC has made outdoor dining a permanent part of our streets.” Despite this, the approval process can still take up to 6 months.

The stipulations for outdoor dining structures include things like mobility for being removed in the winter (November 30th-March 31st), distance guidelines for walkways, structures must be 15 feet from subway entrances for example. All structures must be routinely cleaned and secured while the business is closed. Sidewalk cafes are not permitted to have any additional flooring and roadway structures can have maintained flooring as long as it is easily transportable. For an extensive list of regulations visit City of NewYork

It’s not just iconic New York namesakes benefiting from this trend. Through the Dining Out NYC website, the city is offering programs for small businesses to complete their application. NYC Department of Small Business Services Commissioner Kevin D. Kim offers support to small businesses during this change through a hotline at 888 SBS-4NYC or the Dining Out NYC website.

Dining Out NYC offers services for all types of restaurants. Through the program, owners can apply for sidewalk or roadway-style dining, whether they participated in the temporary program or are a new restaurant seeking easy expansion. The entire process for a sidewalk café can take up to 6 months and 5 months for dining structures located in the street. Once the application is submitted, the restaurant will have 30 days to bring their setup to code as per the Dining Out NYC requirements. Failure to adhere to requirements can incur fines of up to $1000 for each offense. These guidelines include things like wheelchair accessibility and transportability for roadway structures so they can be removed during the winter months. The website also offers companies that can assist with the construction, moving, and storage of outdoor dining furniture and an FAQ section that answers topics like alcohol compliance, fees and rates, and what setups should look like. For more information, visit the official website of Dining out nyc

Want to capitalize on outdoor dining but not sure if your restaurant can afford expansion? Talk to a Paperchase hospitality accountant to review your finances and help make the best decision for your restaurant’s future. Paperchase can forecast potential revenue from outdoor dining to determine if structural investment is worth it or raise money through our operator fundraising programs so you can reimagine the use of public space for the betterment of your business.

New York City is known for its iconic restaurants and vibrant nightlife, but the two don’t always overlap. This month, the NYC Hospitality Alliance met with Mayor Adams and the Office of Nightlife to discuss issues facing the hospitality industry. This meeting coincided with the City Council’s approval of eliminating restrictions on dancing in many bars and restaurants, a major victory for the Hospitality Alliance. This change is part of Mayor Adams’ plan to boost economic opportunity in the city. 

The “Footloose” restrictions originally required establishments to obtain a license to permit dancing, but New York’s “City of Yes for Economic Opportunity” is doing away with this infrastructure. Businesses with dancing fell under Group 12, as opposed to eating/drink establishments as per the NYC Community Board. To allow dancing, restaurants must obtain a Certificate of Occupancy or a Temporary Certificate of Occupancy. Previously, zoning regulations only allowed dancing in establishments that could accommodate over 200 people. This will hopefully create job growth, help businesses expand, and update outdated zoning codes, claims Mayor Adams.  

The “City of Yes” initiative is partially aimed at minority and immigrant-owned restaurants and bars to expand and foster a strong customer base, uplifting the culture of these businesses which is heavily based on dancing on music. The majority of these laws have been antiquated for years. The issue of dancing in restaurants has been a battle since 2017 when the city repealed a license requirement passed in 1926 as part of the Cabaret Law. This prohibition-era law prohibited dancing in public spaces that sold food and drink unless they had a cabaret license. In 2017, only 97 out of around 25,000 establishments had a cabaret license, predating the first upturn of the archaic law. After a series of “noise complaint” related violations, New York businesses rose against the regulations that were hurting their business.  

The trend of hybrid clubs/restaurants is increasing in popularity, for example, Zero Bond. The “City of Yes” initiative will allow restauranteurs to take advantage of this and capitalize on their future. Businesses that have different revenue centers and many employees like a club/restaurant combo are often complicated accounting ventures. Paperchase has worked with some of the most well-known examples of this trend like Bagatelle, Sexyfish, and Seaspice so our accountants are well-versed in helping complex operations.  

Ultimately, an end to these regulations saves business owners the stress of not only being fined or shut down but also from a mountain of paperwork that can take months to get approved. The reversal of these zoning laws puts businesses and culture first, ushering in a period of economic growth for the industry. Have questions about zoning regulations or fees? Speak to your Paperchase hospitality accountant for more information.  

Restaurant reservation scalping, where third-party platforms use bots to snatch reservations at popular restaurants and resell them for a profit, has been hurting restaurants, workers, and consumers alike. The NYC Hospitality Alliance successfully advocated for a new law to stop this practice. This law requires platforms to get written permission from restaurants before selling reservations, ensuring these coveted spots go to genuine customers and restaurants don’t lose revenue due to “no shows,” waitstaff don’t miss out on tips, and consumers don’t have to pay inflated prices.

The problem of reservation scalping in the hospitality industry has been prevalent for years but has gotten worse post-COVID. The media has highlighted certain websites that facilitate the sale of reservations without authorization from the restaurant. Like concert ticket scalpers, unlawful sale of reservations hurts businesses and customers. After the pandemic, consumers were eager to eat in restaurants again causing a surge in demand, not to mention the newfound ability for businesses to go viral boasting lines out the door with a single TikTok recommendation. Combine high demand with predatory scalpers and it is nearly impossible to score a table without waiting and exaggerated amount of time.

The law, introduced last month, outlines that “third-party reservation services” are prohibited from distributing reservations without contractual agreement from the food service establishment. The proposed law would penalize third-party services at $1000 per violation of those guidelines. The issue with many of these programs is that they are operated by bots that immediately secure the reservation when it is released. Paperchase’s hospitality accountants work with the most popular platforms like Resy, OpenTable, and Tock to ensure the success of your business. We reconcile and track no-shows and reservations that can point to the potential reselling of your reservations

When bots steal restaurant reservations and are unable to resell them, the table remains empty during dinner service, causing the business to lose crucial revenue. Additionally, the server in that section loses the ability to get a tip from that table. Third-party reservation interference also presents the problem of miscommunication with regular customers, whose reservations may have been bought or booked under someone else’s name. In general, scalping makes it difficult for customers to make reservations at all. Iconic New York restaurants are already difficult enough to secure a table without third-party platforms scooping them up and charging an exaggerated fee. This comes after a series of New York-based regulations created to protect the exploitation of restaurants, employees, and those who use third-party delivery services like DoorDash or UberEats. Scalpers, whether in person or an automated bot, steals the ability for programs like Resy and OpenTable to use customer data and build client relationships. A huge part of the New York restaurant scene is a reliance on familiarity and repetition. This is why the role of Matre’d has remained prevalent in New York despite advancements in technology.

If passed, the new law championed by the NYC Hospitality Alliance represents a significant victory for restaurants, workers, and diners. It effectively dismantles the predatory practice of reservation scalping, ensuring fairer access to coveted tables, protecting restaurant revenue and staff income, and eliminating inflated consumer prices. This legislation serves as a model for other cities struggling with similar issues, paving the way for a more ethical and equitable dining experience for all. To review your restaurant’s best reservation or POS system, work with Paperchase’s hospitality accountants to ensure you’re making the best business decisions in the wake of changing tech and regulations.

New legislation which will allow hospitality staff to keep their tips and service charges may well come into law after winning backing from MPs as a recent private members’ Bill on ‘tips’ was put forward by the Conservative MP Dean Russell.

No doubt you have seen stories in the hospitality media relating to new legislation that will ensure 100% of tips go into the pockets of workers. Mayur Shah, the Head of Payroll at Paperchase Accountancy has been investigating the new Bill and can now report what all the noise is about! Here are the key points:

The details

Now, Paperchase understands a lot about Tronc, however, like when you buy a house, you engage an expert, a solicitor, to conduct the legal works. So, we spoke to our friends at WMT and Buzzacott, the two leading TRONC specialists in the UK, to explain the changes.

We asked Peter Davies, Managing Director of WMT Troncmaster Services Ltd to simply outline his understanding of how the legislation would work when it finally becomes, and these are his salient points:

Allocating fully to workers

100% of the face value of the amounts paid by customers are to be distributed to workers with the exception of any statutory tax or National Insurance deductions required as a part of the payroll process. All tips must be paid to workers by the end of the month following the month in which they were paid, so (for example) a tip paid on 25th July 2022 by a customer must be paid to staff no later than 31st August 2022.

Distributing tips across sites

We understand that tips paid by customers must be paid to workers who have worked at the same place of business where the tip was received. We also understand funds generated at one site cannot be paid to workers from different sites operated by the same business unless workers have actually spent time at the site where the tip has been paid. It may also be possible to pay a share to workers at “non-public” places of business such as Head Offices and dark or central production kitchens, however this needs clarification.

Fair allocations

An employer will be obliged to demonstrate that tips have been allocated “fairly and transparently” to workers. An employer does not have to operate a tronc system to fairly distribute tips to workers. It will be possible for an employer to contractually agree to distribute a specific amount of tips to a worker, although this will of course result in National Insurance Contributions being due. However, where an independent tronc is used which satisfies the criteria for exemption from National Insurance (which are not changing) this will automatically be deemed as “fair” and in having such a tronc the employer will have met their statutory obligation for “fairness.”

Transparency

Under the new legislation, workers will have the right to see an employer’s record which should demonstrate how that employer has distributed 100% of tips to workers within the time period permitted by law, and that any allocation carried out by the employer has been “fair”. Workers will not be entitled to see the precise details of the allocation including how much has been paid to other colleagues and fellow members of staff, but if an employer does not maintain sufficient records, or refuses to provide them to a worker upon receipt of a qualifying written request, an employee may bring an employer in front of an Employment Tribunal. Should the Tribunal uphold such a claim then they may make an order that the employer recompenses the worker, and the Tribunal may also make an additional compensatory award of up to £5,000.

Agency staff

Currently, agency workers do not receive a share of tips, due to the practical difficulties in paying and taxing monies to workers who are not employed by the business and are not on their payroll system. The new legislation will protect agency workers, and their statutory right will be to have a to have a fair share of tips on the same basis as directly employed staff. Agency workers cannot be excluded or disadvantaged simply because they are provided through an agency. They must be paid in full with only statutory deductions permitted (PAYE and National Insurance).

Tronc & pay reductions

A worker will no longer be able to agree to reduce their levels of basic salary in return for qualifying for, or receiving, a share of tips. Such a change is often made when an employer decides to set up an independent tronc system for the first time. This will mean that businesses who currently do not operate a tronc will need to make a once-and-for-all decision on whether or not to introduce tronc in advance of the new legislation, and going forward new businesses will need to make the decision well in advance of recruiting staff. Also, it will be illegal to use any form of tips and service charges to meet an employer’s obligations under the National Minimum Wage Regulations, whether or not a tronc is used.

Mark Taylor, Head of Tax Investigations at Buzzacott had the following comments to make:

“In our experience, and certainly among our tronc portfolio of clients, hospitality businesses already wish to fairly distribute to their staff service charge, tips, and gratuities (‘tips’), spontaneously paid by customers. Their desire is not only to reward their talent appropriately but also to retain them. Despite our belief that some aspects of the proposed legislation are unnecessary, we are pleased to see that the benefits of using a corrected implemented tronc arrangement by an independent troncmaster like Buzzacott remains in place and that we can continue to secure for our clients National Insurance exemption, thus maximising the actual amount of tips our tronc members receive and, at the same time, save our clients’ money. Hospitality businesses need to urgently review their current tipping practices to ensure they will be compliant and seek specialist advice as appropriate.”

Almost every hospitality business will be affected by the new Employment (Allocation of Tips) Bill should it become law. It will improve transparency; customers can be confident tips do in fact go to the workers and employers are being fair with their employees.

Mayur Shah – Head of Payroll at Paperchase Accountancy concludes:

“The current Bill makes provision for Ministers to introduce a Statutory Code of Practice regarding tipping, subject to consultation with ACAS and subject to confirmation from the Houses of Parliament. The Code will set out the principles of what is considered ‘fair’ and provide examples, but to date, that Code has yet to be drafted. The current Bill is silent on how tronc systems should be run and managed day-to-day and it is expected that any guidance or changes regarding this will be contained within the subsequent Code of Practice.”

Paperchase will continue to provide further updates as the Bill continues to make its way through Parliament, and after the Parliamentary recess for the summer, the ‘Allocation of Tips’ Bill may well gain some momentum.

Author: Mayur Shah – Head of Payroll – Paperchase Accountancy
E: mayur@pchase.co.uk T: +44 (0) 20 86337812 Ext 2101

New legislation became law on the 6th April regarding the listing of calorie information on restaurant menus. So, what does this mean for the UK hospitality sector? Marc Bertorelli, who has spent his entire working life in the hospitality sector, and is now the Business Development Manager of hospitality accountancy specialists Paperchase explains in detail what the new law means.

It is estimated that overweight and obesity related conditions across the UK costs the NHS £6.1 billion each year. Almost two-thirds (63%) of adults in England are overweight or living with obesity, whilst 1 in 3 children leave primary school overweight or obese.

As a result, on 22nd July 2021, UK Parliament passed legislation making it compulsory for restaurants, cafes and take-aways to print calorie labels on menus. These measures, which now form part of the government’s wider strategy to tackle obesity, will be expected to ensure people are able to make more informed, healthier choices when it comes to eating food out or ordering takeaway food into their homes.

Now, in April 2022, this legislation becomes law and larger restaurants, cafes and takeaways in England will need to display calorie information for customers at the point of choice.

Business Scope

The requirement extends to any business with 250 or more employees which offers non-prepacked foods and soft drink items suitable for immediate consumption by the purchaser. The legislation requires that the new information be displayed on physical menus, online menus, and food delivery platforms and will need to report the calorie values of those foods.

The types of businesses covered by this requirement include:

Franchise Businesses

Franchisees carrying out business under a franchise framework agreement where the sum of the overall franchisees in the franchise group exceed 250 or more employees, will be seen and considered as qualifying. It will be the responsibility of the business selling the food, the franchisee, to ensure the calorie information is displayed in accordance with the regulations.

Where the franchising agreement does not cover common foods across the franchise network, and only covers the provision of alcoholic drinks, as in the case of a pub franchise, a franchisees business is not thought to be part of the franchisors for the purpose of determining whether it is a qualifying business

Online Food Sales

The requirement extends to foods sold on a website or on a mobile application, including third party delivery services such as Just Eat and Deliveroo. Where food in scope of the regulations is sold on a website or mobile application, the business responsible for that website or mobile platform (the remote provider) is then responsible, irrespective of the size of that business, and is then registered to display the calorie information offered for sale by the qualifying business.

Mass Catering

Calorie labelling is not required in certain establishments when food is provided ‘in house’ such as a staff canteen. However, where food is provided by another organisation, with 250 or more employees, such as a large contract caterer, then calorie information must be displayed. The following establishments qualify:

Qualifying Foods

Qualifying foods include:

Exempt foods include:

Exempt foods for particular audiences:

Other exemptions:

Restaurants, cafes, and takeaways will be allowed to offer a menu without calorie information upon request. However, menus with calorie details should still be offered by default.

Menus in restaurants, cafes and take-aways with over 250 employees will also have the message that “adults need on average around 2000 kcal a day.” This guidance is not in line with NHS guidelines, which state that the ideal daily intake of calories varies depending on age, metabolism, and levels of physical activity, among other things, men need around 2,500 calories a day and women need around 2,000 calories a day.

Displaying Calorie Information & Calorie Content

Businesses selling food in scope of this regulation must:

Calculating Calorie Content

The calorie content displayed should be calculated using the conversion factors listed in Annex XIV of the Retained EU Regulations 1669/2011 on the provision of food information to consumers and should be average values based on:

Tools

A number of menu planning tools are already on the market that will help hospitality businesses to manage this process. One such tool is MenuCal, which can help food businesses comply with legal requirements to manage and record allergen information. It can also be used to calculate the amount of energy in food and drink on the menu. Developed for food businesses in Northern Ireland, MenuCal is a free, practical, and easy to use tool. It can be accessed online using a computer, tablet or phone and stores information safely and securely.

Penalties

The penalty for noncompliance by a qualifying business may result in a enforcement officer serving an improvement notice. However, any person who fails to comply with an improvement notice is guilty of an offence and may be served with a fixed monetary penalty (FMP) of £2,500 as an alternative to criminal prosecution.

Benefit to the Hospitality Business

Calories have been disputed as an accurate way of determining how ‘healthy’ our diet is. It is very difficult to estimate how many calories any one person needs as so many factors can influence this, something that a universal recommended daily calorie intake does not consider. As a food business, one should base your meal plan on the medical advice that you have received, not general Government guidance.

There are three main benefits to hospitality to putting energy information on the menu:

For More Information

Marc Bertorelli comments, “Paperchase provides hospitality businesses with practical insights, solutions and support, every day of their working life, from conception, to opening, through to expansion. Supporting operators confronting the challenges of creating, growing, and maintaining a successful business, if you need help implementing the new legislation regarding calorie information labelling, or any other issue, Paperchase can help.”

About the author:
Marc Bertorelli gained a BSc (Hons) in International Hospitality Management from Oxford Brookes University, following which, he has worked front-of-house with many illustrious establishments, including the London Mandarin Oriental, the Michelin stared ‘The Foliage’ and the Savoy. Marc is now Business Development Manager of Paperchase, the UKs leading hospitality accountancy and business improvement specialists.

New legislation became law on the 6th April regarding the listing of calorie information on restaurant menus. So, what does this mean for the UK hospitality sector? Marc Bertorelli, who has spent his entire working life in the hospitality sector, and is now the Business Development Manager of hospitality accountancy specialists Paperchase explains in detail what the new law means.

It is estimated that overweight and obesity related conditions across the UK costs the NHS £6.1 billion each year. Almost two-thirds (63%) of adults in England are overweight or living with obesity, whilst 1 in 3 children leave primary school overweight or obese.

As a result, on 22nd July 2021, UK Parliament passed legislation making it compulsory for restaurants, cafes and take-aways to print calorie labels on menus. These measures, which now form part of the government’s wider strategy to tackle obesity, will be expected to ensure people are able to make more informed, healthier choices when it comes to eating food out or ordering takeaway food into their homes.

Now, in April 2022, this legislation becomes law and larger restaurants, cafes and takeaways in England will need to display calorie information for customers at the point of choice.

Business Scope

The requirement extends to any business with 250 or more employees which offers non-prepacked foods and soft drink items suitable for immediate consumption by the purchaser. The legislation requires that the new information be displayed on physical menus, online menus, and food delivery platforms and will need to report the calorie values of those foods.

The types of businesses covered by this requirement include:

Franchise Businesses

Franchisees carrying out business under a franchise framework agreement where the sum of the overall franchisees in the franchise group exceed 250 or more employees, will be seen and considered as qualifying. It will be the responsibility of the business selling the food, the franchisee, to ensure the calorie information is displayed in accordance with the regulations.

Where the franchising agreement does not cover common foods across the franchise network, and only covers the provision of alcoholic drinks, as in the case of a pub franchise, a franchisees business is not thought to be part of the franchisors for the purpose of determining whether it is a qualifying business

Online Food Sales

The requirement extends to foods sold on a website or on a mobile application, including third party delivery services such as Just Eat and Deliveroo. Where food in scope of the regulations is sold on a website or mobile application, the business responsible for that website or mobile platform (the remote provider) is then responsible, irrespective of the size of that business, and is then registered to display the calorie information offered for sale by the qualifying business.

Mass Catering

Calorie labelling is not required in certain establishments when food is provided ‘in house’ such as a staff canteen. However, where food is provided by another organisation, with 250 or more employees, such as a large contract caterer, then calorie information must be displayed. The following establishments qualify:

Qualifying Foods

Qualifying foods include:

Exempt foods include:

Exempt foods for particular audiences:

Other exemptions:

Restaurants, cafes, and takeaways will be allowed to offer a menu without calorie information upon request. However, menus with calorie details should still be offered by default.

Menus in restaurants, cafes and take-aways with over 250 employees will also have the message that “adults need on average around 2000 kcal a day.” This guidance is not in line with NHS guidelines, which state that the ideal daily intake of calories varies depending on age, metabolism, and levels of physical activity, among other things, men need around 2,500 calories a day and women need around 2,000 calories a day.

Displaying Calorie Information & Calorie Content

Businesses selling food in scope of this regulation must:

Calculating Calorie Content

The calorie content displayed should be calculated using the conversion factors listed in Annex XIV of the Retained EU Regulations 1669/2011 on the provision of food information to consumers and should be average values based on:

Tools

A number of menu planning tools are already on the market that will help hospitality businesses to manage this process. One such tool is MenuCal, which can help food businesses comply with legal requirements to manage and record allergen information. It can also be used to calculate the amount of energy in food and drink on the menu. Developed for food businesses in Northern Ireland, MenuCal is a free, practical, and easy to use tool. It can be accessed online using a computer, tablet or phone and stores information safely and securely.

Penalties

The penalty for noncompliance by a qualifying business may result in a enforcement officer serving an improvement notice. However, any person who fails to comply with an improvement notice is guilty of an offence and may be served with a fixed monetary penalty (FMP) of £2,500 as an alternative to criminal prosecution.

Benefit to the Hospitality Business

Calories have been disputed as an accurate way of determining how ‘healthy’ our diet is. It is very difficult to estimate how many calories any one person needs as so many factors can influence this, something that a universal recommended daily calorie intake does not consider. As a food business, one should base your meal plan on the medical advice that you have received, not general Government guidance.

There are three main benefits to hospitality to putting energy information on the menu:

For More Information

Marc Bertorelli comments, “Paperchase provides hospitality businesses with practical insights, solutions and support, every day of their working life, from conception, to opening, through to expansion. Supporting operators confronting the challenges of creating, growing, and maintaining a successful business, if you need help implementing the new legislation regarding calorie information labelling, or any other issue, Paperchase can help.”

About the author:

Marc Bertorelli gained a BSc (Hons) in International Hospitality Management from Oxford Brookes University, following which, he has worked front-of-house with many illustrious establishments, including the London Mandarin Oriental, the Michelin stared ‘The Foliage’ and the Savoy. Marc is now Business Development Manager of Paperchase, the UKs leading hospitality accountancy and business improvement specialists.

Marc Bertorelli can be contacted on:
M: 07545 922908 E: marc@Pchase.co.uk W: www.Pchase.co.uk