Service Level Agreements – key points

What is a Sevice Level Agreement (SLA)?

A Service Level Agreement (otherwise known as an SLA) is usually an add-on, often in the form of an annex, appendix or specification to the main contract between a supplier and a customer for the provision of services.

A primary reason for this is often so that the service level aspects can be amended without altering the main terms and conditions of the contract.

As service level agreements often include technical information lawyers who draft the agreements will often rely heavily on their client for input but will then make sure that the terms of the SLA are clear and tie in with the provisions of a main Service Agreement.

Common uses of a Service Level Agreement

SLA contracts are generally used in connection with long term, business critical multi-year contracts such as IT Outsourcing or property maintenance contracts but can also be used for many other performance related cpntracts such as marketing services.

Depending on the sort of service and organisation and how bespoke the arrangement is, the SLA may be tailored to the customer’s requirements or may just set out the different levels of service available – so it may say what the customer will get depending on whether they have signed up to, for example, a bronze, silver or gold level of support or maintenance package.

Key terms in a Service Level Agreement

The sort of things which are likely to be covered in an SLA, especially for anything related to IT, are as follows:

• Detailed specifics about the level of service that can be expected by the customer;
• How service levels will be measured;
• The remedies or penalties that will apply if the service levels are not achieved;
• Tables with Response Times for different types of problems with escalation procedures to more urgent response and/or more expert people in the service provider if there are problems with the service
• Support hours and how requests can be made – helpdesk phone line, emails and whether this is available 24/7 and, if not, is there any “out of hours” number.
• The categorisation of various types of problem that might arise and how they will need to be fixed e.g. can they be sorted out remotely or will physical attendance at the customer’s location be needed.
• Fees for the relevant services/package and what is included and when extra charges apply (e.g. out of hours, weekends and public holidays, replacement parts having to be ordered).
• Severity levels (e.g. Levels 1 (critical) to 3 (minor)) and the target response times for these. This may be split so that there is a response time for acknowledging the issue and getting back to the customer and a target response time for fixes.
• There may also be overall targets that may need to be met so that service will be available for a certain specified % of time (except for pre-scheduled maintenance and updating).
• How the issue will be fixed and depending on the sort of service, what happens about any consumables or spare parts, how these will be obtained and charged.

Service Levels, Service Credits and Termination

An SLA should then go on to state clearly what are the consequences of a failure to meet targets (although service provider drafted SLA may not include anything specific unless the customer asks for this).

Often a certain number of failures to meet targets within a specified period (which may be tied to severity of the issue where the target wasn’t met) or in consecutive months will lead to the customer being entitled to a service credit which can then be set off against the cost of the service.

There will also usually be a provision (which may be in main Service Agreement) stating what level of failures to meet target service levels will be regarded as a material or persistent breach that justifies termination of the Service Agreement and what would happen in such circumstances.

Excluded items

An SLA will also typically say what is within the package of services the customer has bought for a specified price and what is excluded.  These will be things that the supplier would expect to cover and are not due to fault of the customer or a third party who might not be appropriately skilled to deal with the relevant issue.

If the excluded item is something that the service provider could do but is not part of the agreed package of services, there will be a provision allowing the customer to request this as an extra item and the service provider will then quote for the work separately and, if the work goes ahead, it will be as additional work outside the agreed service and service levels.

Beware waiver of breach of a Service Level Agreement

As with all forms of contract, much depends on what happens after a breach or partial non-compliance of that contract. Having a very detailed set of specifications in a service level agreement protects the buyer of those services, but if he/she/they allows a pattern to develop where the service levels are not met and the buyer does not take action to ensure the breaches are remedied and the contract adhered to may mean that the buyer will lose or water down his/her/their ability to strictly enforcre the service levels going forward.

Solicitors for a Service Level Agreement

We are experienced in advising on, drafting and reviewing Service Level Agreements. We also assist where there is a dispute involving a Service Level Agreement. Please call or email to discuss your needs.