Freelancer fees versus standard wage

In our fee recommendation we follow the collective agreement between Ver.di and the producer’s alliance. We deduce the minimum fees for freelancers from that agreement, too, with an addition of 30%. This value results from the non-wage labour costs, that the film productions spend for employees.:

In the year 2017, the gross weekly wage for employees employed for the duration of the production (5 days, max. 50h) amounts to:

Sound (mixer): 1.537 €
Boom operator: 1.334 €

For the employer, the production company, the employee relationship results in extra costs in the form of employer contributions to social security insurances. The actual costs that a film employee “causes” the production company are therefore significantly higher.

The knowledge of these hidden costs can seriously strengthen the freelancer’s negotiating position in the fee negotiations with production companies, as the funds are usually already budgeted via SESAM calculation software based on collective agreements.

Some production managers estimate the non-wage labour costs erroneously to a mere 20%. Upon close inspection, however, the realistic surcharges are within the range of 26-29%! This would correspond to sound mixer fees on account of min. 400 – 430 Euro non-wage labour costs per 10-hour-day (excl. Umsatzsteuer/turnover tax).

Non-wage labour costs

Here you have a listing of non-wage labour costs that production companies pay their employees (employed for <10 weeks). A good and fast way to calculate the non-wage labour costs for employers and employees can be found on www.imacc.de (German).

  • Pension insurance 18,7%
  • Unemployment insurance 3,0%
  • Health Insurance 14,6% (14.0% reduced)
  • Care insurance 2,55% or 2,8% (childless)

Half of the premiums mentioned above – approx. 19.4% – are to be contributed by the employer.

  • Umlage U1 (fund contribution U1) / health risk from the 1st week on*: approx. 1.9%
  • Umlage U2 (fund contribution U2) / maternity leave: approx. 0.38%
  • Umlage U3 (fund contribution U3) / insolvency payments: 0.09%
  • Holiday 0.5 paid days off*/week = 10%
  • Accident insurance (Berufsgenossenschaft Energie Textil Elektro Medien): 1.0%
    (Gefahrtarifstelle (hazard pay jobs) 1311, and hazard classes 3.5, calculation: gross yearly wage x hazard class x 0.00318 x 10% discount)
  • Royalties: – (separate component of the copyright collective agreements)
  • Christmas bonus: –
  • Holiday pay: –

The last three points are possible for employees in theory, but highly unlikely in the project-based film industry, which is why they are not calculated.

(*special conditions in the FFS collective agreement, possibly less protection/service if you’re not a Verdi member)
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Which amounts to:

Gross employee wage + 32.5% non-wage labour costs <= labour costs for production companies

Contribution assessment ceilings (Beitragsbemessungsgrenzen)

For social security contributions, however, the Beitragsbemessungsgrenzen BBG (contribution assessment ceilings) apply.

  • BBG1 applies to health and care insurance and is currently at 4350 €/month
  • BBG2 applies to unemployment and pension insurance and U1, U2, U3 and is currently at 6350 €/month (in Eastern Germany 5700 €)

In case the monthly employee wages exceed these ceilings, the percentage of non-wage labour costs decrease, as the contributions orientate towards the fixed caps. With a sound mixer fee of 1537 €/week for 4.3 weeks/month, we get a monthly wage of 6609 € for bigger projects (overtime is converted into extra days (collective agreement “Zeitkonto 50-40″/time account 50-40)). If you apply the contribution assessment ceilings to this, the percentage of BBG-oriented employer contributions decrease to 18.25%, (1206 €), what amounts to overall additional costs of 29.3% for bigger projects.

For further calculations, we keep using the percentage of 32.5% mentioned above.

Künstlersozialkasse
(German artist’s social insurance, abbreviated KSK)

For the production company, taking on freelancers has the following consequence: it results in costs in the form of contributions to the artist’s social insurance KSK. The KSK contribution is incurred for all freelancers, that a film production company hires, no matter if they are a member of the KSK or not.

  • Contribution KSK 2017: 4,8%

The KSK contributions of production companies are effectively freelancer’s “non-wage labour costs”. When the freelancer’s fees are recognised from the perspective of production companies in the same amount of working costs for employees, the following applies:

gross employee wage + 32.5% ~ freelancer fee + KSK contribution

which gives

gross employee wage + 32.5% – KSK contribution ~ freelancer fee

Invoicing offers further advantages for the production companies, as the costs are due only after the performance (not at the beginning of the month) and besides require little bureaucracy.

  • Bureaucracy savings by invoicing: approx. 0.3%
  • Lending rate (10%) by downstream payment of the invoice amount (1 month): 0.8%
  • The unpaid public holidays of freelancers are another sheer advantage for production companies, but they are difficult to grasp statistically. With approx. 7 public holidays nationally that fall on working days, per average this results to 0.13 holidays per week, so another 0.1% advantage.

that means:

Gross employee wage + 32.5% – KSK contribution ~ freelancer fee – advantages by invoicing

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From the producer’s perspective, equal working costs arise for employees and freelancers, when the relation

Gross employee wage + 28.5% ~ freelancer fee

is given.

In case, for bigger projects, the effects of the contribution assessment ceilings apply (gross monthly wages > 4350 €), the effective non-wage labour costs decrease to:

Gross employee wage + 25.3% ~ freelancer fee
(Example calculation: gross monthly wage of a production sound mixer with collective agreement in a monthly full-time employment and employment for duration of production of under 10 weeks).

Above 10 weeks of employment, the benefit costs for the employees in case of sick leave increase to 1-2%.

If you base your calculations on collective agreements that are laid-out for a permanent employment, further advantages of monetary value add up for the production companies when hiring freelancers, like employment risk and redundancy costs…

The bvft fee recommendation has already taken the non-wage labour costs shown here into account, which is why the freelancer fees are 30% higher that the standard wages for temporary employees.

We would like to point out that it cannot be in accordance with the sound professional’s goals to undermine collective agreement wages for employees with the amount of their own fees. This holds true especially for freelancers working on account! The collective agreement and the bvft recommendation therefore both mention MINIMUM fees, that should be exceeded but undercut.

Overtime

As the collective agreement if laid out for a volume of 40 weekly hours, this necessarily creates the need for an overtime remuneration in the fee negotiations.
Hence, the collective agreement sees

  • 25% premium for working hours from the 10th hour on (projected onto a 50-hour-week),
  • 50% premium for working hours form the 13th hours on,
  • 100% premium for working hours from the 14th hour on. Overtime of that extent is only acceptable in exceptional cases, however.
  • 25% premium result from night work between 10 p.m. and 6 a.m. as well as on Sundays and public holidays

We wish pleasant negotiation results!
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