SLA Clause (Service Level Agreement) template clause

    Updated: 25 March 2026

    Please note: these example clauses are intended as a starting point, not as legal advice. Always adapt the text to your specific situation and have important contracts reviewed by a legal professional.

    Clause text

    Article [X] - Service Levels

    1. The Supplier guarantees the following minimum service levels during the term of this Agreement:
    (a) Platform/service availability: [percentage, e.g. 99.5]% per calendar month, measured excluding scheduled maintenance;
    (b) Maximum response time for Priority 1 (critical) incidents: [number] hours after notification;
    (c) Maximum response time for Priority 2 (high) incidents: [number] business hours after notification;
    (d) Maximum resolution time for Priority 1 incidents: [number] hours after notification;
    (e) Scheduled maintenance shall take place outside business hours only and shall be announced at least [number] business days in advance.

    2. The Supplier shall provide monthly reports on actual service levels achieved. Each report shall include at a minimum: actual availability, the number of incidents per priority level, average response and resolution times, and an explanation of any deviations.

    3. If the Supplier fails to meet the availability target in paragraph 1(a) in any calendar month, the Client shall be entitled to a service credit equal to:
    (a) [percentage, e.g. 5]% of the monthly fee for availability between [e.g. 99.0]% and [e.g. 99.5]%;
    (b) [percentage, e.g. 10]% for availability between [e.g. 98.0]% and [e.g. 99.0]%;
    (c) [percentage, e.g. 25]% for availability below [e.g. 98.0]%.

    4. Service credits shall be offset against the next invoice. The total service credits in any calendar month shall not exceed [percentage, e.g. 30]% of the monthly fee. Service credits do not affect the Client's right to claim damages for an attributable breach.

    5. If the Supplier fails to meet the service levels set out in paragraph 1 for three consecutive calendar months, the Client may terminate this Agreement with immediate effect, without the Supplier being entitled to any compensation for the remaining term.

    What does this clause mean?

    An SLA clause defines measurable performance standards that you can expect from your service provider. Without concrete commitments on uptime and response times, it is difficult to hold a supplier accountable when service quality falls short.

    Paragraph 3 introduces service credits: automatic discounts when agreed service levels are not met. These are not damages but a financial incentive to keep the supplier on track. According to CIPS, 80% of invoices do not match the underlying contract terms. An SLA with service credits gives you an objective basis for adjusting invoices when the delivered performance falls below the agreed standard.

    Paragraph 5 provides an exit route for persistent underperformance. Three consecutive months of missed SLAs indicates a fundamental problem and justifies termination without further obligations.

    When should you use this clause?

    Include an SLA clause in every agreement for ongoing services: cloud platforms, software licences, facilities management, IT support, and telecommunications. The clause is especially important when your business operations depend on the availability of the service.

    According to World Commerce & Contracting, 9.2% of annual revenue is lost due to poor contract management. A contract without measurable SLAs makes it nearly impossible to detect and address underperformance in time. Combine the SLA clause with periodic review meetings and record the results in your contract management system.

    Customize these elements

    • 1Set availability targets realistically: 99.9% ("three nines") is significantly more expensive than 99.5%. Assess what your business process actually requires
    • 2Distinguish between response time (when the supplier starts working on the issue) and resolution time (when it is fixed). Both should be in the SLA
    • 3Define priority levels with concrete examples to avoid disputes over incident classification
    • 4Consider a bonus-malus arrangement instead of penalty-only: rewarding above-SLA performance motivates the supplier positively

    Sources

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