A service level agreement (SLA) defines the services a provider will deliver, the measurable standards such as uptime, response and resolution times, how performance is reported, and the remedies, usually service credits, if standards are missed. It often sits within or alongside a master services agreement.
Key components
- Service description and scope
- Service levels and KPIs
- Measurement and reporting
- Service credits and caps
- Escalation and governance
- Exclusions and dependencies
Setting good KPIs
KPIs should be specific, measurable and linked to business impact, such as 99.9% monthly uptime or four-hour resolution for critical incidents.
Remedies
- Service credits as a percentage of fees
- Termination rights for persistent failures
- Step-in or remediation plans
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Get expert help →Drafting tips
Clarify measurement windows, planned maintenance exclusions, and whether credits are the sole remedy.
Frequently asked questions
Is an SLA legally binding?
Yes, when it forms part of a contract between the parties.
Are service credits a penalty?
They are usually drafted as a price adjustment for reduced service, which courts are more likely to enforce.
Can an SLA be changed during the contract?
Only by agreement, typically through a change control procedure.
Do SLAs apply to internal teams?
Internal SLAs are useful for governance but are not legally binding contracts.
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