Setting up a new Cleaning Services Company – or expanding your existing one? Make sure you have some proper Terms of Business.
Terms of Business do not need to be long-winded – and having them not only protects you and your business, but also helps to give your business a professional look, especially when you are bidding for work from a new client.
As well as having a document with the right terms, it is sensible to prepare the documentation in a user friendly format. My usual approach is to have the contract in three parts:
- Printed Terms of Business which you can show to a potential client if he asks for them;
- A Schedule prepared for each client that specifies the job location, services, hours, charges and other relevant information and
- A short one page agreement (or letter) confirming the appointment, start date etc., to be signed by you and the client – with the other two documents attached.
What terms should you include in the Terms of Business? Here are the basics:
Briefly describe the services you provide – e.g. specify the general cleaning services, with details for each client set out in the separate schedule. It can also give comfort to a client to see that the Terms state that you take care to vet/check the competence of any new staff, that they will be required to comply with any client security procedures etc.
Duration & Notice
This will say what the minimum contract period is – maybe 6 or 12 months, whether it continues if not terminated at the end of that time and how much notice needs to be given to bring it to an end.
Charges & Payment
Either set out the agreed charges here or put them in a schedule. In addition you should say how often invoices will be issued and the payment date – e.g. weekly with payment due 7 days from the invoice date. It is sensible to refer to VAT and to reserve the right to increase charges on an annual basis. You may also state that interest can be claimed on late payment (for B2B contracts the law allows you to claim 8% above Bank of England base rate).
Sometimes rates for extra services are set out in a schedule. And remember to specify any expenses that are payable in addition to the charges. The right to suspend services for late payment (as a softer to alternative to ending the contract) is sometimes included, usually after a 7 day notice period.
Practical matters can usefully be covered here – e.g. the client to allow access during agreed working hours, explain all alarm and other security arrangements (and any changes), provide storage for your equipment etc.
Damage or Loss of Property
Make it clear that your liability for loss or damage to client’s property is limited to cases where you or your staff were at fault and you may want to state your liability for claims (above a certain amount) will be limited to the amount you can recover from your public liability insurers.
It can be useful to insert a complaints procedure in the Terms – making it clear that complaints have to be made promptly, say within 48 hours, and that they will be properly investigated and dealt with by you.
Be sure to include a clause that allows you to terminate at any time by giving notice if the client does not pay, breaches the agreement or becomes insolvent. Sometimes clients like to see this clause written on a mutual basis.
It can be useful to include a ‘force majeure’ or unforeseeable events clause so that if this occurs you will not be treated as failing to perform the contract – although you will need to give notice and do whatever you can to overcome the problem.
No Poaching Your Staff
The risk of a client offering good cleaners a job is a real risk for cleaning companies and it is a good idea to make it clear this would be a breach of contract – both during the life of the contract and for a period after it finishes. Sometimes the Terms will require a client to pay a fee – equal to say 3 months’ salary – as damages if the obligation is broken.
Limit of Liability
It is always wise to limit liability – but be sure the limit is reasonable. Often the clause will firstly exclude liability for loss of profit and other indirect losses incurred by the client and secondly by capping the liability at a fixed amount. Sometimes this will be related to the fees that are payable under the contract. Since it is not permissible by law to limit liability for death or injury, this risk has to be unlimited and identifies as such. While the contract may not require it, your firm should take out public liability insurance to protect against risks and you can then limit that liability to the amount you get form your insurers.
Disputes and Law
If a dispute occurs, it can be useful to have a three-stage process for dealing with the problem. First, direct negotiation between senior executives, secondly, if this does not resolve the matter, the dispute can be referred to mediation. Only after these processes can a dispute be referred to the courts.
ContractStore offers various templates that can be used for cleaning contracts, including: