On this page
What are Secondary Payments?
Secondary payments is an umbrella term used by Equity to cover payments that are made to performers subsequent to their contractual engagement to compensate them for the use (sometimes known as ‘exploitation’) of their performance. They are distinct from a performer’s salary/engagement fee which compensates the performer for their services. They are also distinct from use fees which are pre-purchased at the time of contract.
Secondary payments are negotiated by Equity and a performer’s right to them is derived from the relevant Equity collective agreement, which in turn is incorporated into a performer’s individual Equity contract. In feature film, the right to receive secondary payments was introduced into our Cinema Films Agreement in 2002 and comes in the form of either a Royalty (a percentage of gross receipts after the expiration of defined pre-purchased periods), or a Net Profit Share reported through an independent collection agent. In television and made for streaming productions, performers may be entitled to a Royalty (as above) or a Residual (a percentage of your original fee).
Understanding Secondary Payments FAQs
Quite simply, performers deserve fair and proportionate remuneration for the use of their work. This should be set out clearly and distinctly from a performer’s salary. There is a legal framework providing performers with certain rights over their performance (see our Performer Rights section). However, there are currently extremely limited rights to statutory compensation for these rights. That is where your union and collective bargaining plays a crucial role.
Secondary payments give performers a share in the commercial success of a production. They are an important supplementary income source for performers whose work pattern is often uncertain and who may struggle from gaps in employment. They can potentially benefit performers long after the point of filming. They are important in principle because they act as remuneration for the creative contribution that a performer makes to a production.
If you have worked on an Equity form of Engagement, whether it be as an actor, stunt performer, stunt coordinator, dancer, singer, puppeteer, voiceover or performance capture artist, you are potentially entitled to some sort of secondary payment. Supporting Artists and ADR Artists engaged to provide general characteristic sounds / creation of atmosphere (often over crowd scenes) are generally not entitled to secondary payments. Performers working on non-Equity forms of engagements will not be entitled to secondary payments unless they have managed to individually negotiate them. Even then, performers should be aware that some entitlements can be worthless without robust enforcement provisions and measures to back them up.
Unless you have individually negotiated a framework for secondary payments within your contract, you will not. Even if you believe that you have negotiated this, in the vast majority of cases the provision will be too weak to enforce. Equity urges its members to exercise extreme caution when working on non-union projects. Equally, performers should be cautious of any production claiming to offer ‘Equity equivalent’ terms. Equity is uniquely positioned not only to negotiate these payments on behalf of performers, but also to monitor, enforce, collect and disburse such payments and there really is no ‘equivalent’ to this.
For Royalty and Net Profit Share payments payable under Equity’s Cinema Films Agreement, your individual pro rata share is determined by a standard Time and Salary formula. For Royalties payable under Equity’s Television Agreements, your pro rata share will be based on your aggregate earnings/salary alone. For repeats of television productions on terrestrial television, your share will be a percentage of your original earnings, sometimes with an additional percentage applied to account for inflation.
- The type of production and which collective agreement is incorporated into your Form of Engagement
- The platform / media / territory in which your performance is being exploited
- The number of days and weeks you worked on the production
- Any specified pre-purchase of use fees as detailed in your individual Form of Engagement.
All secondary payments for Equity feature films flow through Equity. For secondary payments relating to television production, these are usually handled by the production company or broadcaster who will report to and pay the performer directly. Equity has, however, been appointed by some television companies to handle payments via its Distribution Services. For example, HBO, Sony and Miramax report and pay their TV Royalties through Equity.
Equity also negotiates and distributes catch-up payments for BBC iPlayer; ITV Player; All4 and Sky on demand.
Equity is responsible for negotiating minimum contractual terms through collective bargaining and any secondary payments flowing through Equity will be thanks to a specific clause in your contract / Equity’s collective agreements. Monies flowing through BECS are statutory in nature and not related to a performer’s contract. BECS is a collective management organisation (CMO) which collects international revenue from other CMOs based on statutory frameworks. For example, there are laws providing for payments to performers in audiovisual works to compensate for private copying (home taping), cable retransmissions, video rentals and other uses.
Understanding Secondary Payments Glossary of Terms:
Advertiser Funded Video on Demand (AVOD) - The making available of a production to a consumer through a video on demand service or online platform which is not connected to the linear transmission or television transmission of the production by a broadcaster where the consumer may view (but not make or keep a permanent copy of) the production at a time of his or her choosing and the consumer is not charged a fee to access such service which is funded by adverts/sponsorship (e.g. YouTube).
Assumption Agreement – An agreement whereby responsibility for the payment of secondary payments is assumed by a new company separate to the Producer, usually triggered by a sale or license of the copyright in a production.
Audit – Equity’s ability (thanks to provisions contained within our collective agreements) to review the books and accounts of a Producer through the appointment of an auditor for the purpose of verifying the accuracy of the information disclosed to Equity as pertaining to receipts and payments.
Beneficiary – The person(s) who are designated by a performer to receive that performer’s income from secondary payments after his or her death.
CAMA – Collection Account Management Agreement. Used for Option A films made under the Cinema Films Agreement to show the definition of Net Profit and the waterfall of payments.
Catch up TV services - The making available of a production to a consumer to view (but not make or keep a permanent copy of) the production within a set period from broadcast of the production on a service connected to and/or operated by a broadcaster at a time of his or her choosing and which the consumer is not charged a fee to access.
CDPA – Copyright, Designs and Patents Act 1988, Part II of which deals with Performer Rights.
CFA – Cinema Films Agreement.
Collection Agent – In the context of ‘Option A’ feature films, an independent third-party organisation through which all income and expenses flow and which report Net Profit to Equity and other parties/beneficiaries including the producer of the film.
Collective Agreement – The minimum terms Agreement negotiated by Equity which is incorporated into a Form of Engagement, eg., Pact/Equity Cinema Films Agreement, Pact/Equity Television Production Agreement, BBC Agreement etc.
Collective License – An agreement negotiated by Equity, over and above our collective agreements, to remunerate performers for use of their work on Catch up TV services - BBC iPlayer; ITV Player; All4 and Sky on demand.
Copyright – The legal protection of creative work giving the copyright holder exclusive rights to publish, copy, distribute and sell their creation. No one else can use the work without permission.
Distributor’s Gross Receipts - Total gross receipts derived from sales and licenses relating to exploitation of a production in the relevant market, medium and territory excluding gross receipts from any pre-purchased initial use period.
Download to Own (DTO) / Electronic Sell-Through (EST) – A service that provides a digital copy of a production that a consumer can acquire whereby such consumer can keep and/or view the production for an indefinite time period and with no restriction on the number of times viewed.
Download to Rent (DTR) - A service or transaction whereby a consumer/user is able to download a temporary copy of a production or access a production for a time limited period via a video on demand or online platform at a time of their choosing on payment of a fee for the production.
Form of Engagement – Individual performer contract.
FVOD (Free Video on Demand) - the making available of a production to a consumer for no charge to access (but not make or keep a permanent copy of) the production at a time of his or her choosing and access is not related to the linear transmission of the production or occurs more than 30 days after the linear transmission of the production.
Interest on Late Payments – Interest at the rate of 3% per annum above the Bank of England’s base rate should a Producer fail to pay any secondary payment payable on or before the payment due date and if the Producer shall fail to remedy such failure within 30 days after Producer’s receipt of written notice of such failure. Applicable for engagements under the Cinema Films Agreement and the Pact Television Agreement.
Net Profit – The basis on which a performer is entitled to secondary payments when engaged on an ‘Option A’ film under the Cinema Films Agreement. The definition of ‘Net Profit’ will be defined in the Collection Account Management Agreement issued by the appointed Collection Agent as agreed between the parties. In essence it is the profit remaining after the recoupment of the cost of production and all other subsequent and/or ongoing costs such as advertising costs and distribution expenses.
Network Terrestrial television – BBC1, BBC2, ITV1, C4 (including S4C) and Five.
Option A – An independent film with a budget less than £20,000,000 produced under the terms of the Cinema Films Agreement and which reports on the basis of Net Profit.
Option B – A major studio film with a budget over £20,000,000 produced under the terms of the Cinema Films Agreement and which, at the expiry of the initial use periods, reports on the basis of Distributor’s Gross Receipts. Distinct from Option C in that ancillary uses such as publishing and merchandising trigger small additional payments as and when used.
Option C – A major studio film with a budget over £20,000,000 produced under the terms of the Cinema Films Agreement and which, at the expiry of the initial use periods, reports on the basis of Distributor’s Gross Receipts. Distinct from Option B in that ancillary uses such as publishing and merchandising are cleared (unless separate provisions are individually negotiated) in exchange for an enhanced Royalty payment structure.
Out of Time Escalator – Applicable for terrestrial repeats of productions made under the Pact /Equity Television Agreement. Residuals for older productions have an increasing value to keep the payments in line with inflation. This is in contrast some international entertainment unions where payments for reruns operate on a declining scale.
Pact - The trade association for the UK's independent production sector with whom Equity negotiates for cinema and television production.
Participations – Distinct from secondary payments derived from Equity’s collectively bargained agreements, these are individually negotiated backend payments usually only available for ‘top tier’ talent.
Pay Per View Television (PPV TV) – Any encrypted pay TV service for which a subscriber is charged a separate fee over and above any basic pay TV service subscription for viewing any production or group of productions on the service at a time scheduled by the service provider.
Pay Video on Demand (PVOD) – The making available of a production to a consumer where the consumer may view (but not keep a copy of) the production at a time of their choosing and where the consumer pays for the production either on a subscription or per-viewing or per-viewing period basis.
Performer Rights – Find out more on our performers' rights page.
Pre-purchase – Fees for any applicable use (which may be limited by term or territory) as set out in the performer’s Form of Engagement that have been pre-paid and therefore will not attract a Royalty or other secondary payment until such time as the expiration of the pre-purchased period. The pre-purchased period starts from the first use in that market/media/territory.
Producer – The entity which engages the performer as set out in the performer’s Form of Engagement.
Residual – A fixed payment being a defined percentage of a performer’s engagement fee which is triggered by a certain use. This operates much like a use fee but is usually triggered by a certain use rather than being pre-purchased upfront. Unlike a Royalty, a Residual is never determined by or based on the gross receipts realised by the sale or license of a production.
Royalty – A defined percentage of gross receipts payable to Equity performers for the exploitation of their performance in certain media, markets and territories and as set out in a performer’s Form of Engagement and the applicable Collective Agreement. Usually 3% or 3.5% in film and 17% in television.
Secondary Television – Either (i) any UK free to air service other than UK Network Terrestrial Television, or (ii) any UK pay TV channel for which a subscriber is charged a periodic fee for receiving a channel as part of a basic package of services, and specifically excluding any Pay Per View Television and Subscription Television channels.
Subscription Television – Any UK pay TV channel for which a subscriber is charged a periodic fee for receiving that channel.
Subscription Video on Demand (SVOD) – Where a consumer/user pays a periodic fee for access to a non-linear service or online platform on which a variety of productions are available.
Terrestrial Television – BBC1; BBC2; ITV1; C4 (including S4C) and Five. In our Television Agreements repeats on these channels attract a
Time and Salary Units – The means by which Equity’s Distribution Services allocate secondary payments for feature films. Units are attributed to performers on the basis of days/weeks worked and salary earned.
Use Fees – A percentage of a performer’s aggregate earnings which pre-purchases a stated use as set out in a performer’s Form of Engagement.
Videogram – Any physical copy of a production, eg., DVD by which means a consumer can keep and view a production repeatedly.
Waterfall – The basis on which income realised by Option A films flows down to the various parties involved as set out in the CAMA.