Unlike an employment contract, a service contract is a more formal document. It focuses primarily on the performance and quality of service that one company expects from the other party and what is traded in exchange for these services. Developing a proper service agreement can mean the difference between smooth running and total chaos when it comes to specifying your expectations towards a third party. It is important to ensure that the terms of your company`s service agreements have a solid legal basis, even if they are not legally binding. In order for ALS to have a “bite,” the non-level of service must have financial consequences for the service provider. More often than not, the integration of a service credit system is the most common way to achieve this. In essence, the service provider pays the customer an agreed amount that should be used as an incentive for performance improvement if the service provider does not meet or credit the agreed service standards. These service credits can be measured in different ways. Like what. B, if the 99.5% level for reports is not met, ALS could include a service credit, which is granted some price reduction for each performance gap of 0.5% per week. Service credits may also be granted if z.B. three or more errors occur to complete a level of service over a period of time. Here too, each level of service must be considered individually and a reasonable level of credit must be agreed between the service provider and the customer if the agreed level is not reached over a period of time.
It is important that the service credits are adequate and that they encourage the provider to do better and that they enter early enough to make a difference. Often, ALS will include an amendment control procedure that defines a mechanism for agreeing and recording changes to the agreement or services to be provided. In an agreement of any length or complexity, it is inevitable that changes will be made to services (which affects service levels) and an agreed and properly implemented change control procedure is essential. We may also propose a review of your existing service agreements to ensure compliance with existing legislation. An example of a service level agreement is the document that an Internet service provider typically makes available to its customers. Such a document would outline some important things if it is properly written: service credits are useful in encouraging the service provider to improve its performance, but what if the service is significantly below the expected level? If alS includes only one benefit credit plan, the client may be able to pay for an unsatisfactory overall benefit (albeit at a reduced rate), unless the service provided has been bad enough to constitute a substantial violation as a whole. The solution is to include a client`s right to terminate the contract when service delivery becomes unacceptable. Therefore, ALS should include a critical level of service defect below which the service provider has that right to terminate (and the right to sue for damages). If z.B. Service credits come into effect, if a level of error has occurred twice in a given period, alS may indicate that the customer has the right to terminate the contract for significant violations, for example if the level of service has not been reached during the same period.