Service Level Agreement Legal Meaning

However, this can lead to great complexity, as multiple external service providers can be involved in running a workflow. Service level agreements for each of these drives ensure that the company can run its workflows smoothly, while service providers know exactly what is being asked of them. There are three basic types of SLAs: customer, internal, and vendor service level agreements. For the SLA to have a “bite”, the lack of a level of service must have financial consequences for the service provider. This is most often done through the inclusion of a credit system for services. In essence, where the service provider does not meet the agreed performance standards, the service provider pays or credits the customer an agreed amount to encourage performance improvement. These service credits can be measured in different ways. For example, if the 99.5% level for reporting is not reached, the SLA could include a service credit that grants some price reduction for each 0.5% discount per week. Alternatively, service credits can be awarded if, for example, there are three or more errors to fulfill a service level within a certain period of time. Here too, each level of service must be considered individually and a reasonable level of credit must be agreed between the provider and the customer if the agreed level is not reached over a given period.

It is important to ensure that service credits are appropriate and encourage the service provider to do better, and that they intervene early enough to make a difference. An SLA should be considered as a contract between a service provider that can take place either internally or externally, and an end-user. The level of service is clearly explained in the SLA to ensure that both parties understand the level of service to expect. These types of agreements are expense-based, which means that their overall purpose is to explain what the end user receives from the service provider. SLAs can theoretically be brought to justice. It should be kept on the agenda, however, that all legal processes related to the application of an SLA are usually extremely time-consuming and very costly. . . .