What are work stoppage and delay fees?
Assume you are a service provider and you are taking videos of clients’ products for their websites. You have camera people, production staff, voice over talent and other staff all ready for the day’s shoot, and you have booked the studio for the day.
What happens if the Client prevents the work from going forward on time? Perhaps the product to be shot does not arrive in time to be assembled properly. Or the client decides on one more script edit at the very last minute.
It does not matter if the client stops the work arbitrarily or if work grinds to a halt because
the client failed to meet its obligations on time; you, the service provider, are going to feel the pain.
What is needed is protection in the form of work stoppage and delay fees in the Statement of Work (SOW) executed with the client:
A provision passing on the unavoidable costs incurred because of the delay; and
A significant hourly fee for the time the work is delayed.
This is a fair arrangement. The hourly fee provides an incentive for the client to keep to the schedule it agreed to. The charge for unavoidable incurred costs is clearly fair. If the service provider can take steps to reduce those costs, it is obligated to do so, so the client pays only for what costs the service provider could not postpone.
Perhaps these provisions do not fit every arrangement, but work stoppage and delay fees payable by the client can be important protection for the service provider.