Service Levels (SLA)
A service level clause sets measurable performance targets for a service, such as uptime or response times, and the remedies that apply when they are missed.
What it does
A warranty says the service will work. A service level agreement (SLA) says how well, in numbers. Typical metrics are availability (the service is up 99.9% of the time in a month), support response and resolution times by severity, and sometimes performance measures such as page load time or processing throughput.
The clause defines how each metric is measured, over what period, and what is excluded from the measurement: scheduled maintenance, force majeure, problems caused by the customer, and third-party outages are the usual exclusions. It then sets the remedy for a miss. The standard remedy is a service credit: a percentage of the monthly fee credited against future invoices, rising with the severity of the shortfall.
Most SLAs state that credits are the customer’s sole remedy for the failure. Some add a termination right if the service level is missed repeatedly, for example three months in any six.
Example wording
The Supplier shall make the Service available at least 99.9% of the time in each calendar month, excluding Scheduled Maintenance and Excluded Events. If Availability falls below 99.9% in any month, the Customer shall be entitled to a Service Credit of 5% of the monthly Fees, rising to 10% if Availability falls below 99.5% and 25% if it falls below 99.0%. Service Credits are the Customer’s sole and exclusive remedy for any failure to meet the Availability target, save that the Customer may terminate this Agreement if Availability falls below 99.0% in any three (3) months within a rolling six (6) month period.
Risks for SMBs
Credits that do not cover the loss. A 10% credit on a monthly fee of a few hundred euros is trivial compared to a day of lost business. Credits are a signal of accountability, not compensation. If a service is business-critical, negotiate the termination right and check the liability cap, rather than haggling over credits.
Sole remedy language. If credits are the sole remedy, the customer cannot claim damages for an outage even where the loss is severe. Combined with a low liability cap, the customer’s protection is minimal. See liability cap.
Measurement the supplier controls. Availability is measured by the supplier’s monitoring, over the supplier’s chosen period, with the supplier’s exclusions. Monthly measurement hides a two-hour outage inside 99.7%. Ask for the data, and for a right to dispute the figures.
Credits must be claimed. Many SLAs require the customer to request credits within a short window, such as 30 days, or lose them. Few SMBs track this, so the credit is never paid.
Exclusions that swallow the promise. Broad exclusions for “emergency maintenance,” “network issues,” or “events beyond the Supplier’s control” can exclude most real outages from the calculation. Read the exclusions as carefully as the target.
Supplier-side realism. An SMB supplier promising 99.99% uptime on infrastructure its own cloud provider only guarantees to 99.9% cannot keep that promise. Match your SLA to what your suppliers give you.
Common variants and negotiation points
- Targets. 99.9% monthly availability (roughly 43 minutes of downtime per month) is a common middle ground for business SaaS. 99.5% is typical for less critical tools.
- Credit scale. Credits that escalate with the size of the miss, up to a meaningful ceiling such as 25 to 50% of monthly fees, are fairer than a flat token amount.
- Automatic credits. Ask for credits to be applied automatically to the next invoice, without a claim.
- Chronic failure termination. A right to terminate without penalty, with a pro-rata refund, after repeated misses is the most valuable SLA remedy for a customer.
- Maintenance windows. Limit scheduled maintenance to defined hours outside the customer’s business day, with advance notice, and cap the total hours per month.
Related clauses
- Warranty: the general quality promise the SLA makes measurable.
- Termination for cause: how chronic SLA failure links to exit rights.
- Force majeure: the main exclusion from SLA measurement.
- Liability cap: what remains recoverable beyond credits.
This page is general information about a common contract clause. It is not legal advice and does not account for your jurisdiction, industry, or the specific contract in front of you. Talk to a qualified lawyer before relying on it.
Tracking renewal dates, notice periods, and other contract obligations is what Trackado does.