How to Manage Global Residuals: A Guide to North America, the UK and Australia

Residuals are ongoing payments designed to compensate writers, actors, directors, and others when their work in a movie, television show, or internet production gets rerun on a different channel or reused in a different format. Studios, producers, and distributors are responsible for paying residuals.

With so many different content formats and delivery mediums at play, budgeting for and managing film and television residuals has become a very complex, nuanced process. That complexity multiplies when you zoom out and examine how residuals work across multiple global jurisdictions. But whether you are producing an independent film, a production accountant, or involved on the studio finance side of things, it’s important to be familiar with key similarities and differences in how residuals are handled throughout the world.

In this post, I’ll provide a high-level overview of how four major global production hubs—the United States, Canada, the United Kingdom, and Australia—manage and regulate residuals.

How residuals are handled in the United States

Compared to other jurisdictions, the United States (US) takes a fairly ‘hands-on’ approach to residuals. Rates are fixed and agreed upon by unions and studios, with the goal of treating roles uniformly across productions. Payments are calculated based on the job title (role) an individual held during production rather than individual negotiations or specific contract terms. These rates are calculated based on multiple formulas determined by the product-made-for-type.

In the United States, the following unions are responsible for ensuring residual rules and regulations are met for their respective members:

• The Screen Actors Guild-American Federation of Television, and Radio Artists (SAG-AFTRA) manages residuals for members employed as principal performers, recording artists, or background actors.
• The Director’s Guild of America (DGA) manages residuals on behalf of members who are Directors, Assistant Directors, and Union Production Managers working in film or television.
• The Writer’s Guild of America (WGA) manages residuals on behalf of member writers working in film, television, radio, and online media.
• The American Federation of Musicians (AMF) manages residuals on behalf of member musicians from all fields (freelance, touring, recording) and composers/arrangers.
• The International Alliance of Theatrical Stage Employees (IATSE) manages residuals on behalf of below-the-line member talent (picture technicians, artists, broadcasters, etc).

Each union is responsible for making sure its members are adequately compensated anytime a production generates additional revenue. In the US, guilds also have a talent base with the authority to monitor activity and let the unions know if a payment is missed.

Disbursement is managed in a repetitive process for each production:

• Once a project starts generating revenue or has reruns, streaming, or syndication, residual payments are sent directly to the union.
• The union is responsible for distributing the residuals to the appropriate members based on their roles and predetermined payment splits.
• If a production generates more new revenue or reruns at any point in time, the process repeats.

Unions typically don’t use any residual funds to cover administrative costs. Rather, those costs are covered by the applicable producer or studio. That means, in most cases, 100% of each residual payment goes to the recipient.

For episodic products, SAG-AFTRA allows residual advances for top-of-show actors, while DGA and WGA only allow advances if certain initial pay thresholds are met.

Offering an advance benefits producers by eliminating the need to make multiple smaller payments over time. However, doing so means hedging a bet on long-term production performance, which can be a gamble. If a project doesn’t generate as much revenue as anticipated, bulk advances are often more costly in the long run.

Now, let’s see how residuals are managed on the other side of the pond.

Residual management in the United Kingdom

The United Kingdom approaches residuals quite differently than the United States, particularly in terms of how residuals are calculated and distributed. The UK has a more ‘hands-off’ approach, especially in relation to the enforcement and technical aspects of the residual formulas.

Much like the US, UK unions—including Equity (the UK’s actors' union) and the Writers' Guild of Great Britain (WGGB)—negotiate allocations of residuals based on job roles, collect payments from production companies, and distribute them to eligible individuals based on the predetermined split for that project. However, there are a couple of key UK differences worth noting.

For one, producers pay unions directly and payments are made in one lump sum. Just like in the US, each union distributes payments to member talent—but they charge an administration fee cover the cost of this task in the UK.

To give an example of residual costs:

• British Equity theatrical products usually have higher buyout rate percentages, which are calculated in a four-year range. However, after those four years, the reuse rate is low.
• Episodic products have a lower buyout rate. In contrast, the reuse rate can be as high as 17%, and cannot be prorated even if SAG-AFTRA members are on the project.

The examples listed above represent two of many different ways a producer or studio can choose to pay residuals for British Equity. Meaning, producers have more options in the UK.

Canada’s unique production residual calculation model

Canada uses two primary methodologies—a gross receipt and profit approach and a buyout approach—for calculating and distributing residuals.

During contract negotiations, it’s common for unions to use residual buyouts, also referred to as advance residuals, as a bargaining tool. These buyouts allow producers to make a one-time, upfront payment to a residuals recipient in lieu of making ongoing payments. This ‘lump sum’ payment typically covers residuals for a set period of time. For example, a 125% buyout would guarantee compensation for any replays that may have taken place across the next four years.

In this system, once a project starts generating revenue beyond a pre-agreed threshold, residuals are calculated based on a percentage of the gross receipts or profits. This creates a structure where higher-grossing films or shows yield higher residuals.

In Canada, Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) and it’s branches, such as UBCP/ACTRA, are responsible for the administration of use fees for film and television productions produced under collective agreements.

Canada’s residual system offers unique benefits to smaller production companies, which may not have the cash flow for upfront residual buyouts or standardized payments. In this more flexible model, production companies have the ability to negotiate payments that align with the financial success of their projects. As a result, it’s easier for smaller studios to produce content without being burdened by the upfront costs a more rigid system like those seen in the US or UK requires. Given this unique structure, it’s clear why smaller productions often find Canada’s method of calculating residuals appealing.

That said, there are some drawbacks and uncertainties introduced by the gross receipt & profit and buyout approach. In the US and UK, residual payments are typically triggered by a production’s first broadcast or distribution rather than its profitability. In Canada, it can take longer for residual payments to start getting distributed since productions must recoup costs before actors, writers, and crew members are eligible to receive any additional compensation. This unique structure makes the Canadian residuals model more unpredictable—but potentially more rewarding—for successful productions.

Australia’s evolving take on residual management

Australia has adopted a residual system that largely mirrors the US, particularly when it comes to theatrical and episodic releases.

Specifically:

• Unions negotiate standardized residual rates based on job titles
• Residuals are paid out over time as a project continues to generate revenue.

Also, much like SAG-AFTRA in the US, Australia’s principal union for creatives and professionals—the Media, Entertainment & Arts Alliance (MEAA)—plays a central role in residual distribution. MEAA acts as an intermediary, ensuring that producers comply with residual agreements and that payments are distributed fairly to eligible members.

More recently, Australia expanded the above residual rules to include television productions. Today, Australian actors and crew members on large productions like NCIS: Sydney are eligible for residual payments under the same framework that governs episodic releases.

This shift has been welcomed by local unions and guilds, who are eager to see television held to the same standards as movies. Adopting union-led residual standards for both film and television productions helps ensure Australia's creative talent is fairly compensated as the local industry continues to grow.

Get residuals right with expert guidance from Entertainment Partners

Residuals are a vital component of how creative professionals in the film and television industries are compensated for their work over time. But as you can see, the systems for managing residuals are nuanced and varied across major global jurisdictions—spanning from heavily standardized to flexibly evolving.

Different approaches reflect the unique dynamics of the film and television industry in each country, balancing the interests of producers and talent alike. No matter where you plan to take your next project, Entertainment Partners can help you determine the best way to budget for and manage residuals. Learn how we can help.