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Buyer Beware On occasion, it may be desirable or necessary for a Canadian producer to engage a Writers Guild of America ("WGA") member to provide writing services on a Canadian production. Under the terms of the reciprocal agreement between the WGA and the Writers Guild of Canada ("WGC"), the two guilds have agreed that the WGC has the right to exert jurisdiction over Canadian production companies engaging WGA members - even if the WGA member and the producer agree that the Canadian company would become signatory to the WGA. Under the provisions of the WGA-WGC reciprocal agreement, there are a number of issues that the Canadian producer should be aware of that will be different than a normal WGC signatory situation. The WGA-WGC reciprocal agreement essentially operates as a "hybrid" between the WGC Independent Production Agreement and the WGA Basic Agreement. The writer will be entitled to the benefits of the WGA Agreement while still allowing the producer to operate under the jurisdiction of the WGC. The WGA "Working Rule 8" prohibits WGA members from providing services to any company that is not a signatory to the WGA Agreement unless the member is granted a written waiver by the WGA prior to the writer commencing writing services. The waiver will require that the WGA member be paid no less than WGA minimum compensation as well as WGA residuals pursuant to the terms of the WGA Agreement. Credits will be governed by the terms of the WGA Agreement as will the producer's obligation with respect to contribution of pension, health and welfare payments. In addition to agreeing to abide by certain terms of the WGA Agreement, the Canadian producer will also be required to sign the WGC Voluntary Recognition Agreement ("VRA") binding it to the terms of the WGC Agreement. The WGC requires that writers will be entitled to payment of a "Production Fee" upon commencement of principal photography of a production, which is based on a percentage of the budget for the production. A WGA member providing services to a Canadian producer would get the benefit of the production fee, a concept that does not otherwise exist in the WGA agreement. For example, if a producer pays a WGA writer $50,000 to write a script for a $3,000,000 TV movie, the production fee will be $77,825 (see Article C1004 of the WGC Agreement). The difference between the script fee and the production fee ($27,825 in the foregoing example) would be considered a pre-payment of WGA residuals (to the extent that the script fee exceeds WGA minimum scale). A summary
of the net effect on a Canadian producer engaging a WGA member is
as follows: WGA minimums apply (which are generally higher than
WGC minimums); WGA residuals will be due rather the WGC Distribution
Royalty; The WGC production fee is payable whether a WGA or WGC
member is engaged and can be considered as an advance on WGA residuals
to the extent that it exceeds WGA scale;
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