Your Contract Termination Policy

Posted By Will Moody On , Reading Time - 3 minutes

General

Your contract termination policy

As a website designer/developer should you have the right to terminate a contract?

What's your termination policy?

Let's think about this a couple of ways. First, what is a termination policy?

A big assumption here is that you are actively using a contract for all your freelancing or consulting engagements. If you're not, you really do need to get one in place.

The termination policy of your contract dictates the circumstances on which a contract engagement can be terminated. This covers both you and the person you are contracting for. Because of this, it is worth evaluating a couple of aspects before deciding on what your approach should be.

To be honest, a whole bunch of things have to go wrong before you start considering enacting the termination policy of your contract. We're not talking about engagements that end gracefully - we're talking about toxic relationships.

Who does the termination policy cover?

Most termination policies cover both parties in an engagement. This means that the customer I'm working for should have equal rights to terminate the agreement as I do.

And this is only fair. As a contractor, you shouldn't be able to fire someone just because you feel like it. On the other hand, you wouldn't want a client to fire you just because they feel like it.

There is a big proviso here. If the client doesn't pay, you should be free to terminate that agreement immediately, I'm assuming that you have a payment agreement in your contract. Don't stay with clients that don't pay.

How much notice would you want from a client?

In terms of the notice, this is usually a question of what kind of notice would you want to receive from a client. Depending on how many clients you have, and how long a typical contract runs, this could be a serious blow to your income and livelihood.

It is understandable to want as much notice as possible. In most of my contracts, I have required a standard 30 days notice for the termination of any agreement. This provided me the opportunity to start looking for new work while still providing the services I was brought on for.

But it's worth noting that the client is already removed from the process at this point, so it is unlikely you'll be 100% busy during this time.

How much time would you like to stick around with a toxic client?

Thirty days' notice sounds great, but what if you are dealing with a toxic client? Do you want to have to stick around with that client for 30 days?

I would think the answer is no and so I would suggest a 14 days termination policy as being reasonable.

What if I terminate and a client doesn't pay?

This is where a good solid contract comes into play. My contract, for example, states that Client shall immediately pay to Company all amounts owed to Company.

It's worth being reasonable with accounts payable people, but you should expect your final payment within the NET payment schedule you have in the contract.

If you're not paid within that time, send a couple of reminder emails to the client but do not be afraid to invoke your solicitor/lawyer. A simple letter from them could be enough to trigger payment.

This is such a touchy subject and will vary greatly from business to business, hopefully this is something that you won't have to invoke.