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Q: Safeguarding wages on 'deferred payment' contracts

I am playing the lead in a soon to be shot low budget feature-length film. The management is still trying to raise the budget via investors, and the original contract was based on a deferred minimum Equity daily rate, with the artists the last to be paid. This could mean no actual money for five weeks work. I do not want to miss out on a good opportunity but how can I safeguard myself?

A: I am not a film lawyer but my understanding of the position is as follows.

Normally the production budget would include all the performers' remuneration, and they would be paid as and when they do the work in the usual way. However, in the case of what is known as a 'low budget feature film', where the producer is either unable or unwilling to raise sufficient finance to pay the performers as well as the other production expenses, such as technicians, camera crew, sets, special effects, director etc, he may manage to persuade the actors to defer payment of their remuneration until after shooting is completed and the film is distributed and revenue starts to come in, on the basis that after the finance is repaid the actors will then be next in line for payment off the top before anything else.

This represents a considerable risk to the actors concerned because, not only is payment being deferred, but they may never get paid at all if shooting is not completed, if the film is never distributed or if it does not make enough money to provide a surplus after repayment of the finance. Consequently, there is a natural reluctance on the part of actors to accept such terms, and whether or not they do so will depend upon how badly they want to perform in the film, the level of demand for their services generally, whether and to what extent they can do as well elsewhere during the period in question, whether they need the experience or are already seasoned performers, and other factors of a personal nature.

If you do decide in principle to go into such a deal, there are certain ways in which you can improve your position, depending on your negotiating strength and how much the film producer wants or needs you. Thus you could say that, in return for agreeing deferred payment and taking the risk of not being paid at all, you want a percentage increase in the remuneration you would otherwise get, or a share of profits, whichever is the greater, or you could demand both. Your argument would be that if you are being asked to share the risk then you should get an uplift or a share of the profit, if any. You could also seek to get it agreed that the collection agent through whom revenue from exploitation of the film would normally be channelled, should be irrevocably authorised to pay you (and the other performers) first off the top after repayment of finance, and that this entitlement should be secured by you (and the other artists) having a second charge on the collection agent's bank account into which the film revenue will be paid, subject only to a prior charge in favour of the backers who provided the finance to make the film in the first place.

Your agent, if you have one, should seek to negotiate these terms on your behalf and ensure (perhaps with the aid of legal advice) that any such agreed terms are properly recorded in the relevant contract documentation.

Low budget deferred terms of the kind described are obviously very controversial and are disliked by the acting profession and their representatives for obvious reasons, but are nevertheless sometimes acceptable in the absence of anything better being available. There is a collective bargaining agreement dated in 1998 between PACT and Equity on behalf of their respective members which provides for artists to be paid no later than each Friday of the week following the week/day of performance, and makes no provision for the kind of deferral with which you are concerned.

Accordingly, if you are a member of Equity and the producer is a member of PACT you risk incurring the displeasure of your union by entering into such an arrangement, although you would not be acting unlawfully by so doing.

First published December 2000