Every film shoot is like a new payroll implementation
Imagine paying out millions of dollars in payroll to hundreds, or even thousands, of employees over a six week period. Now imagine that each employee has a slightly different collective bargaining agreement and you might begin to understand what payroll is like in the film and television industry.
“Because we have to pay on a weekly basis, it would just be a nightmare (to do it on our own),” said Vay Trong, manager of production accounting at Toronto-based Fireworks Entertainment.
That’s why Fireworks and other Canadian and American film studios outsource the payroll for their larger productions to companies that specialize in the niche market of entertainment payroll.
“All the information has to be put in place, the payroll has to be calculated and they shut down six weeks later,” said Kevin Gordon, president of payroll company Entertainment Partners (EP) Canada. “It’s very labour intensive.”
EP writes its own payroll software and it also has exclusive Canadian rights to Vista, a popular entertainment payroll software program, written by Entertainment Partners of Los Angeles.
“A very large payroll company may have one client support representative for every 100 clients,” said Gordon. “We’re almost on a one-to-one basis with productions just because of the amount of effort required in order to get payrolls out that quickly.”
In film and television, productions also have to deal with very complicated collective agreements. On a given production, there could be up to 11 different unions and guilds representing the director, writers, crew and cast.
Then from those 11 basic collective agreements, the union or guild can waive some of the requirements of the collective agreement on a worker-by-worker basis, or modify them so that they’re stricter. The payroll company needs to know about every single condition and rule for each employee’s collective agreement in order to develop the appropriate software for the production.
The basic information needed for payroll includes the hourly rate for each employee as well as the scale rate — the minimum pay rate for a particular job as determined by the union — and when overtime starts.
Another unique aspect of the entertainment industry is something called a meal penalty. Unions have rules as to when the workers are supposed to break for meals and if they don’t get their meal at the specified time, the production has to pay a meal penalty.
“If you’re in the middle of a shot, the director isn’t going to cut just because they’re going to end up 10 minutes late for a meal,” said Gordon. “However, it does affect how they get paid because they get a meal penalty. They get a bump in their salary based on these penalties.”
EP builds customized software for each production based on the collective agreements as well as each production’s preferred formats for their chartered accounts. The production’s accountant then inputs the employees’ start and end times right on location.
The software calculates what the gross pay should be based on the hours worked and the employees’ contracts. Then the accountant electronically transfers the data back to EP, which audits the payroll to make sure it conforms to the required standards. Then the company generates the detailed reports, paycheques and invoices. After a final audit to make sure everything is in order, the payroll production company issues the cheques to the crew and cast.
EP also pays out all union fees and benefits and remits taxes to the government. At the end of the production, the company sends out all the records of employment and at the end of the year it sends out the T4s.
“That’s way too much work for us,” said Trong of Fireworks, who added that a production company would need an entire payroll company to do the payroll for one production on a weekly basis. But by using a company such as EP “you just need one or two people to do the time sheets and enter data and then send it to the payroll company. It’s much easier.”
EP works for different studios on a production-by-production basis, but it also has relationships with several studios, such as Alliance Atlantis, whereby it’ll do the payroll for all their large Canadian productions.
“We always use EP for all our productions,” said Maria Duncan, director of finance at Alliance Atlantis in Toronto. “We’ve used them exclusively for at least seven years.”
She said the volume of payroll makes using a payroll company such as EP absolutely necessary for Alliance Atlantis’s big productions such as the television series Trailer Park Boys and This Hour has 22 Minutes.
EP has done the payroll for such big name American productions as Paramount’s Paycheck with Ben Affleck (filmed in Vancouver), and Universal’s Cinderella Man with Russell Crowe (filmed in Toronto).
American stars working in Canada present another challenge for entertainment payroll. The Canadian-American tax treaty states that Canadians who work in the United States pay their taxes to the U.S. and Americans who work in Canada must pay their taxes to Canada.
However, production companies can get a waiver for American workers, as long as they will only be in Canada for a limited amount of time, so that their income isn’t taxed in this country. Also, big stars such as Ben Affleck and Russell Crowe, who can earn more than $10 million per project, are often paid not only for the work that they do in Canada but also for the time they spend on publicity junkets advertising the film. In that case, their pay wouldn’t come from the production in Canada but rather from the studio in the U.S.
“We’re only responsible for those who are being paid for work done in Canada,” said Gordon.
“Because we have to pay on a weekly basis, it would just be a nightmare (to do it on our own),” said Vay Trong, manager of production accounting at Toronto-based Fireworks Entertainment.
That’s why Fireworks and other Canadian and American film studios outsource the payroll for their larger productions to companies that specialize in the niche market of entertainment payroll.
“All the information has to be put in place, the payroll has to be calculated and they shut down six weeks later,” said Kevin Gordon, president of payroll company Entertainment Partners (EP) Canada. “It’s very labour intensive.”
EP writes its own payroll software and it also has exclusive Canadian rights to Vista, a popular entertainment payroll software program, written by Entertainment Partners of Los Angeles.
“A very large payroll company may have one client support representative for every 100 clients,” said Gordon. “We’re almost on a one-to-one basis with productions just because of the amount of effort required in order to get payrolls out that quickly.”
In film and television, productions also have to deal with very complicated collective agreements. On a given production, there could be up to 11 different unions and guilds representing the director, writers, crew and cast.
Then from those 11 basic collective agreements, the union or guild can waive some of the requirements of the collective agreement on a worker-by-worker basis, or modify them so that they’re stricter. The payroll company needs to know about every single condition and rule for each employee’s collective agreement in order to develop the appropriate software for the production.
The basic information needed for payroll includes the hourly rate for each employee as well as the scale rate — the minimum pay rate for a particular job as determined by the union — and when overtime starts.
Another unique aspect of the entertainment industry is something called a meal penalty. Unions have rules as to when the workers are supposed to break for meals and if they don’t get their meal at the specified time, the production has to pay a meal penalty.
“If you’re in the middle of a shot, the director isn’t going to cut just because they’re going to end up 10 minutes late for a meal,” said Gordon. “However, it does affect how they get paid because they get a meal penalty. They get a bump in their salary based on these penalties.”
EP builds customized software for each production based on the collective agreements as well as each production’s preferred formats for their chartered accounts. The production’s accountant then inputs the employees’ start and end times right on location.
The software calculates what the gross pay should be based on the hours worked and the employees’ contracts. Then the accountant electronically transfers the data back to EP, which audits the payroll to make sure it conforms to the required standards. Then the company generates the detailed reports, paycheques and invoices. After a final audit to make sure everything is in order, the payroll production company issues the cheques to the crew and cast.
EP also pays out all union fees and benefits and remits taxes to the government. At the end of the production, the company sends out all the records of employment and at the end of the year it sends out the T4s.
“That’s way too much work for us,” said Trong of Fireworks, who added that a production company would need an entire payroll company to do the payroll for one production on a weekly basis. But by using a company such as EP “you just need one or two people to do the time sheets and enter data and then send it to the payroll company. It’s much easier.”
EP works for different studios on a production-by-production basis, but it also has relationships with several studios, such as Alliance Atlantis, whereby it’ll do the payroll for all their large Canadian productions.
“We always use EP for all our productions,” said Maria Duncan, director of finance at Alliance Atlantis in Toronto. “We’ve used them exclusively for at least seven years.”
She said the volume of payroll makes using a payroll company such as EP absolutely necessary for Alliance Atlantis’s big productions such as the television series Trailer Park Boys and This Hour has 22 Minutes.
EP has done the payroll for such big name American productions as Paramount’s Paycheck with Ben Affleck (filmed in Vancouver), and Universal’s Cinderella Man with Russell Crowe (filmed in Toronto).
American stars working in Canada present another challenge for entertainment payroll. The Canadian-American tax treaty states that Canadians who work in the United States pay their taxes to the U.S. and Americans who work in Canada must pay their taxes to Canada.
However, production companies can get a waiver for American workers, as long as they will only be in Canada for a limited amount of time, so that their income isn’t taxed in this country. Also, big stars such as Ben Affleck and Russell Crowe, who can earn more than $10 million per project, are often paid not only for the work that they do in Canada but also for the time they spend on publicity junkets advertising the film. In that case, their pay wouldn’t come from the production in Canada but rather from the studio in the U.S.
“We’re only responsible for those who are being paid for work done in Canada,” said Gordon.
