The Film Industry Working Group Report – There and Back Again?

By Rory Nolan

The Employment Relations (Film Production Work) Amendment Act 2010 (commonly known as the “Hobbit Amendment”) was a controversial legislative development. The amendment, passed under the Fifth National Government, notably resulted in a legislative shift which confirmed that film production workers are independent contractors, unless party to an express and written employment agreement.

It is not always the case that the legislative amendment process sparks the imagination of the general public; but the lengthy and heated discourse between The Lord of the Rings director, Sir Peter Jackson, and prominent New Zealand actresses Robyn Malcolm and Jennifer Ward-Leland led to the bill coming under much public scrutiny. Despite the controversy, the Hobbit Amendment was eventually passed.

When the Labour Government rose to power in 2017, it vowed to overhaul the Hobbit Amendment and restore the employment rights of film production workers. However, in keeping with the theme of the Government’s approach to lawmaking; the Film Industry Working Group was commissioned to issue a report before any legislative change would be made.

The Working Group’s Report was released in October 2018.

The Hobbit Amendment:

The Hobbit Amendment amended section 6 (1) of the Employment Relations Act 2000 (ERA 2000) to exclude a person engaged in film production work from the base definition of “employee”.  It also inserted section 6 (1A) which stated that the exemption did not apply if the person was a party to, or covered by, a written employment agreement that provided that they were an employee.

Effectively, this amendment ensured that the majority of film production workers would be deemed independent contractors. Given they were now excluded from the base definition, film production workers were no longer able to apply common law tests to argue that they were in substance engaged as employees. Critically, the amendment prevented film production workers from entering into collective bargaining agreements as independent contractors do not have the right to collectively bargain under the ERA 2000.

The meaning of “film production work” was defined broadly to effectively cover any type of performer or crew member who may be involved with a film production (regardless of whether the work was conducted on or off-set).

Curiously, the terms of the amendment only covered those workers in film or video game production and did not extend to the television industry.  Further, it did not contemplate the rise in web-based content such as web-series and on-Demand serials and accordingly did not include such production types under its definition.

The Film Industry Working Group:

The Film Industry Working Group was formed on 29 January 2018.  The Hon. Iain Lees Galloway announced that the Government and the Group would seek to ensure all workers received a “fair go” and that they would “reach the right balance for workers and producers”.   Mr Galloway stated that the aim of the Group would be to recommend a restoration of the right of film production workers to collectively bargain, whilst also ensuring the continued growth of New Zealand’s “vibrant, strong and world-leading” film industry.

Arguably, the impetus behind this statement is to find a means to improve film production worker rights without leading to drastic changes which might scare away future international film and television investment in New Zealand.

The Working Group’s Report:

The Working Group made three important recommendations: (1) the carve-out under the ERA 2000 for film production workers should be retained;  (2) a requirement that all screen production workers should be engaged consistent with four basic principles; and (3) a legislative movement to allow collective bargaining agreements at a sub-industry and enterprise/ project level.

The three recommendations were prefaced under the Working Group’s recognition that the screen industry in New Zealand is unique and cannot be treated like other industries.  The Working Group recommended that this should be the “starting point” when considering potential legislative amendments.

Retain the Carve-Out:

The Working Group’s conclusion was that the exclusion for film production workers under the ERA 2000 should remain in place, and the status of a film production worker will remain solely determined by the type of contract they are engaged under.  As such, the majority of workers in the industry will remain as independent contractors.

The justification for this decision was that the screen industry is “highly internationally mobile”, and New Zealand requires certainty surrounding labour laws in order to remain competitive in the international marketplace.  If film production workers are able to seek employment status under the normal common law tests, then this uncertainty might lead to unexpected costs and litigation for international production companies, which may deter them from basing their productions in New Zealand.

The second important decision from the Working Group was that the carve-out should be extended.  As noted, the carve-out did not initially cover television production or web-production.  The Working Group considered that there was no longer any justification for the distinction, and noted that many workers frequently move between film, television and web-based productions.  Further, the changing distribution methods of entertainment (such as films which are produced for Netflix and are “online-only”) means that productions no longer fall neatly into the “film” or “television” genres.  Accordingly, the Working Group concluded that the proposed model for labour relations should apply to all screen production work in New Zealand; whether it be for film, television or online mediums.

Four Basic Principles:

The Working Group also advocated that all film industry workers should be engaged for services under four guiding principles, in order to set minimum contract standards for any future collective or individual contracts in the industry.  The Working Group’s intention was that all future industry contracts would include specific provisions concerning these principles.

The Four Basic Principles are:

• Good Faith

The parties to a screen production work contract should be required to act in good faith in their dealings with each other. The intention behind this principle appears to be to prevent the parties from engaging in any misleading or deceptive conduct.

• Protection from bullying, discrimination and harassment

Given the vulnerability of some workers in the screen production industry, the Working Group stated that there should be express provisions dealing with a protection against bullying, harassment of any kind and discrimination.  Despite existing legislation (such as the Human Rights Act 1993 and the Health and Safety at Work Act 2015), the Working Group believed that this issue should be specifically targeted in screen production work given the nature of the industry.

• Fair and reasonable termination of contracts

The Working Group recommended that engagers must act fairly and reasonably when terminating contracts.  However, the Working Group noted that this principle should continue to allow for current practice in the screen industry with respect to early termination of a worker’s contract (for both ‘with cause’ and ‘without cause’ cases).

• Fair rate of pay

The Working Group stated that screen production workers must receive a fair rate of pay in relation to their skills and the scale of the production.  This principle would require collective contracts to cover pay in the form of minimum rates, which may be grouped into bands according to the production scale.

Collective Bargaining Agreements:

The Working Group recommended that legislation be amended to remove any barriers or restrictions on collective bargaining for screen production workers, allowing for two types of collective agreements; sub-industry and project-based.

• Sub-Industry Agreements

The Working Group suggested that legislation should be amended to allow for each major occupational group in the screen industry (e.g. writers, directors, actors, etc) to form a set of minimum terms and conditions, below which workers from that sub-industry cannot be engaged.  When a sub-industry collective contract has been agreed, it will bind all contractors in that sub-industry and all people who engage those contractors.  This is regardless of whether the worker is a member of or affiliated with a signatory party to the collective contract.  It will therefore be universally applicable to any and all screen production projects going forward.

It is intended that the collective agreements will apply to all workers in a particular sub-industry, not just those who are members of a specific guild or union.  The Working Group recommended that a ratification process would be required for any sub-industry agreement, and that all workers within the industry should be given an opportunity to express their views on it, and if they wish, to vote on the passing of the contract.

• Project-Level Agreements

The Working Group would also allow collective bargaining at an enterprise or project level – i.e. specific productions may wish to put collective agreements together which apply to all workers on that specific production.  The Working Group stated that where sub-industry collective agreements are in place, the project-level agreement would not be able to go below the minima set at the sub-industry level.

The purpose is to recognise that there may be unique circumstances (such as where contractors are solely engaged by a single company), where an enterprise level agreement may be appropriate.  It also could be used to fill gaps in the coverage of sub-industry collective agreements, for workers who do not have a relevant sub-industry contract.  The Working Group suggested that the workers could form their own representative group to negotiate the terms.

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Observations on the Report:

There are a number of issues with the recommendations.  The writer summarises some of these observations below.

The Need for Certainty of Labour Laws:

The Working Group’s decision to not instigate significant change is premised on the notion that the screen industry is “unique”.  The Report signals a fear of losing future international production work in New Zealand, with statements such as “screen production is global”, New Zealand “needs to be competitive” and producers require “certainty of cost and flexibility.”  The Working Group has made a clear statement that if drastic changes to employment laws are made, then international productions will move their investments offshore.

However, this exhibits a limited understanding of the true “unique” nature of New Zealand which make it an attractive site for international productions.  In fact, Mr Lees Galloway admitted that New Zealand was not competitive due to wage rates and costs but due to the “skill level of the people who are available in New Zealand, the flexibility, the quality of locations, the investment that’s gone into technology and research…”

The quality of locations and the ease of access to a variety of locations is a strong selling point for the New Zealand industry. The old adage that New Zealand is a country where you can “ski and surf in the same day” becomes increasingly relevant in the film industry, where even large-budget productions will look for a variety of location types within a relatively small area.  Instead of having to base different units of production hundreds of miles apart (or even in different countries), New Zealand’s landscape offers the unique ability to film a multitude of diverse terrains within a small geographic spread.  Particularly for large budget fantasy productions, this is a huge drawcard.

The skill-levels of many of our industry workers is also exceptional.  Compared to larger production hubs (such as Los Angeles, London, Vancouver), opportunities for work in New Zealand are naturally more limited.  Instead of going months without work, film industry workers have instead chosen to diversify their skill palate and engage in as many sub-industries as possible.  For example, in overseas productions, the Hair and Make-Up Departments will be entirely separate departments, with some workers engaged only to deal with “hair”, and other workers only engaged for “make-up”.  In New Zealand, due to the smaller nature of the industry, every member of the Hair and Make-Up department is expected to be skilled in both areas. This enables a more streamlined and efficient production team.  The Hon. Trevor Mallard raised a similar point during Parliamentary debate when the initial Bill was being introduced.  Mr Mallard noted that in countries such as the US and UK, “someone who uses a hammer is not allowed to use a paintbrush,” whereas in New Zealand, the workers are not only allowed to do both roles, but are usually skilled in both areas. International production companies such as Warner Bros have been traditionally drawn to New Zealand shores due to the increased productivity which can be achieved from this multi-skilled work force.

Ultimately, it is unlikely that any significant labour law changes will force productions off-shore.  As noted by Jennifer Ward-Leland, all actors in Australia have employment status and are entitled to all the associated benefits.  Further, most film industries around the globe are heavily unionised with strict minimum standards and conditions.  Statements such as those by National’s Arts Spokesperson, Paul Goldsmith that any major change would effectively kill the industry, are unfounded when such changes would only bring New Zealand’s film labour laws in line with other jurisdictions.

The Wider Definition:

The Working Group also recommended extending the carve-out to cover television and web-based production.  Initially, it makes intuitive sense that the Hobbit Amendment should cover all major mediums of production.  The Working Group is correct to note that the distinction between “film” and “television” is becoming increasingly arbitrary, with major television productions shot with “blockbuster film” budgets and distribution methods for these productions no longer falling into clearly defined categories.

However, the proposed changes may have a significant impact on small-scale productions in New Zealand.  Most low budget local productions in New Zealand now produce content largely for the online medium.  Young and aspiring filmmakers will look to produce short-form content such as web-series, which may consist of a handful episodes (5 to 10 minutes in length).  These episodes will then be distributed for free via Youtube, Facebook and other social media, or may be picked up larger production hubs and aired via TVNZ On Demand or NZME WatchME. These small productions can be produced on a shoe-string budget and are not only a great breeding ground for fostering new talent, but they provide an important avenue for new talent to be discovered by larger production companies.

The extension of the  “employee” carve-out will be unlikely to impact these small-scale productions, where most workers are already engaged as contractors, and employment status would never even be considered.  However, the Working Group need to be careful when considering the implications of setting minimum standards via the Guiding Principles and the sub-industry collective agreements.  If those minima standard are to apply to small-scale web productions as well, then it may become economically unfeasible for these productions to exist.  If small-scale web content starts to die out, then this would be detrimental to the continued development of local creative talent.

Feasibility of Collective Bargaining:

The Working Group is sensible to focus on establishing sub-industry collective agreements (as opposed to focusing on enterprise/ project agreements).  The issue with any enterprise level agreements is that film production engages a diverse range of workers, with varied (and even competing) interests and needs.  For example, the interests of a guest actor on a television show, who may be engaged for several days of work on set (but paid very highly for those limited days of work) has very different interests to a cast production coordinator, who fulfils a more typical administrative role, working in an office with set hours on a “Monday to Friday” style arrangement for the duration of the shoot period (though is often required to work outside the scope of those work hours for limited or no financial reward).

The author notes that there may be potential issues with the ratification process for sub-industry agreements, which could become increasingly complicated.  The Working Group is correct to identify that many workers are not necessarily part of the guild  or union who purports to represent them.  Accordingly, it proposes the solution of allowing all workers within that field to be part of the ratification process.  But even this suggestion is not immediately simple.  Many sub-industries do not have any form of guild or union, and the steps which would be required to define this group of workers, coordinate the potential members and arrange a productive and constructive discourse between them would be immense.  Further, many workers in the industry are engaged in multiple fields (e.g. sometimes actors will work in set construction as carpenters, or writers will also be directors and producers).   Not only does this create further difficulty in defining the group of workers who should be involved in the ratification process, but it also may defeat the attempts to create a separate set of contracts where the unique voices in each sub-industry can be heard.   There is the possibility that a limited set of individuals will dominate discussions across multiple sub-industry contracts.

The Project Level collective agreements are also problematic.  The limited discussion from the Working Group on this issue proceeds on the basis that most workers on a film production are engaged at the same time, and therefore have the ability to coordinate their interests and form a group to negotiate the new minimum standards. This is unfortunately very rarely the case.  Whilst a select group of core actors and production members may be engaged from the outset of production, a large number of actors, and even crew members, will be engaged once pre-production (or even principal photography) has already begun.  It would be difficult to have the majority of workers involved in the discussion/ ratification process, when many of those workers would not even be aware of their involvement in the production until after those agreements would already be concluded.

Conclusion:

It is clear from the thrust of this article that careful consideration as to the true nature of the film and television industry needs to be observed by Parliament, before any drastic changes are made.  However, to carry out a complete analysis of the proposed changes would require an investigation beyond the scope of this article.  In particular, the author notes that the Working Group will need to closely consider how both the Guiding Principles and the collective agreements will interact with existing documents such as “The Pink Book” which sets guidelines for a Code of Practice for the Engagement of Cast (i.e. performers) in New Zealand.

It also remains to be seen to what extent the Government will take onboard the recommendations of The Working Group.  No doubt any proposed legislative amendment will be closely tied to the current discussions with Amazon regarding a Lord of the Rings television show, currently slated to be filmed in New Zealand.  Ultimately, the recommendations are a positive sign for industry workers whose rather limited bargaining power will be increased in at least a minor capacity.  Only time will tell whether those changes will have a drastic impact on the future attractiveness of New Zealand’s film industry to overseas investors.

A copy of the Report can be found here:  https://www.mbie.govt.nz/assets/4c8ac9afb6/recommendations-of-film-industry-working-group-to-government.pdf

By Rory Nolan.

Rory is a commercial barrister employed by Damian Chesterman.  Rory has also worked extensively in the film, television and theatre industries as a professional singer and actor.

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