Freelancers will have to be paid within 60 days under a government crackdown that grants new powers to the small business commissioner.
In its small business plan, Labour said the commissioner will be entitled to conduct spot checks and enforce a 30-day invoice verification period when disputes arise.
It said legislation introducing the maximum 60-day payment term could reduce the period to 45 days within five years.
The government said the measures are the toughest such laws in the G7 countries, which span the UK, Canada, France, Germany, Italy, Japan and the US.
It proposes to legally require audit committees to scrutinise payment practices at board level, meaning that large firms will have to prove they are treating small suppliers fairly and will be subject to mandatory interest charges for late payments
Around half of the UK film and TV workforce are freelancers and a recent Bectu survey showed that nearly 40% of them have had their cash flow impacted, or gone into debt, due to late payments.
Almost half – 47% - said they often or sometimes wait more than 30 days to be paid.
“Creative freelancers, many of whom work in already precarious industries, are particularly vulnerable to and impacted by late payments. And many feel that they can’t complain for fear of missing out on future work,” said Bectu head Philippa Childs.
“This is an absolutely critical issue for freelancers who already face difficulties due to the precarious nature and financial insecurity of their work. I urge the small business commissioner to work closely with the promised freelance champion to do all they can to ensure that any new measures are aligned with the critical need for freelancers to be paid on time.”
The government calculates that late payments cost the UK economy £11bn a year and leads to 38 businesses closing every day.
