I will be increasing the hourly rate for my clients – what do I need to do to record this?
The first thing to do is to check what your current terms of business / client agreements say about a variation of your terms. If you are using standard terms with consumers or even business clients, then even if you have a clause that says you can vary the contract, this clause would need to be reasonable or it would be void.
It's unlikely that a unilateral variation to the detriment of the client would be held to be reasonable (even if you have given yourself the right to vary the terms in the contract). However, what would likely be reasonable would be a term that you may vary the terms on notice to your client and if they don't like those terms, they can terminate the service before those terms take effect.
If however you have an agreement that has been negotiated between the parties and this agreement provides for the right to vary the contract, then it might very well be reasonable to do so.
What would be wise in any event is to give yourself the right in the contract to increase your hourly rate on an annual basis, by an amount no higher than an objective measure such as an increase in RPI for example.
Example wording to do this is:
“We may may increase our hourly rates on an annual basis with effect from each anniversary of the date of this agreement in line with the percentage increase in the Retail Prices Index in the preceding 12-month period, and the first such increase shall take effect on the first anniversary of the date of this agreement and shall be based on the latest available figure for the percentage increase in the Retail Prices Index.”
In terms of documenting this change, you need to look at the notice provisions in your terms of business or client agreement. Some agreements will say that you can serve notice by way of email but some will be more prescriptive about sending legal notices to the registered office address of the client by post. Sometimes the agreement will specify that notice must be sent “in writing” and then near the front or back of the agreement, there is a term that says that writing either includes email or doesn’t include email. If the agreement is vague or silent on this matter, the best thing to do would be to send an email and a letter by registered post. Obviously it would be important to keep a record of this increase on file with a copy of the original signed contract.
If you're interested to know more and to ask your own questions to top business lawyer Suzanne Dibble and learn from the experience of lots of other small business owners, then click here to apply to join our thriving membership for just £1 for your first month!
© Suzanne Dibble 2013-2022
The information contained above is provided for information purposes only. The contents of this article are not intended to amount to advice and you should not rely on any of the contents of this article. Professional advice should be obtained before taking or refraining from taking any action as a result of the contents of this article. We disclaim all liability and responsibility arising from any reliance placed on any of the contents of this article.
