Pitfalls, exit costs and official sources
Cloud and hosting SLAs: uptime percentages, service credits and contract terms to check
What 99.9% vs 99.99% uptime means in minutes, how service credits are calculated and claimed, and the hosting contract terms Canadian businesses should read before signing.
A service level agreement (SLA) promises an uptime percentage and, if the provider misses it, usually offers service credits: a percentage of that month's fee for the affected service, which you must claim within a deadline. Credits rarely compensate for the business cost of an outage; they are a pricing adjustment, not insurance. The SLA terms that matter most are how downtime is measured, what is excluded, how credits are calculated and capped, and what your architecture must look like to qualify (for example, servers in two availability zones). Read those alongside liability limits, data terms, price-change clauses and termination rights.
This guide is part of the pitfalls overview. It is general information, not legal advice.
What uptime percentages mean in time
| Uptime per month | Allowed downtime in a 30-day month (43,200 minutes) |
|---|---|
| 99% | 432 minutes (7 h 12 min) |
| 99.5% | 216 minutes (3 h 36 min) |
| 99.9% | 43.2 minutes |
| 99.95% | 21.6 minutes |
| 99.99% | 4.32 minutes |
A higher percentage is only meaningful if the measurement is clear. Ask: is downtime measured per server, per service or per region? Does it count partial degradation? Who measures it, and can you see the data?
How service credits typically work
A common structure (illustrative):
| Monthly uptime achieved | Credit as % of the affected service's monthly fee |
|---|---|
| Below 99.9% but at least 99.0% | 10% |
| Below 99.0% but at least 95.0% | 25% |
| Below 95.0% | 100% |
Illustrative example. Your managed database costs $260 a month. An outage of 5 hours (300 minutes) in a 30-day month gives uptime of (43,200 − 300) ÷ 43,200 = 99.31%, which falls in the 10% band. Credit: $260 × 10% = $26, applied to a future bill, if you claim it in time. If the outage stopped sales worth $3,000, the credit covers less than 1% of the loss.
Typical conditions:
- credits apply only to the affected service, not your whole bill;
- they are capped (often at the monthly fee for that service);
- you must file a claim, with evidence, within a set number of days;
- they are your sole remedy for the outage, under many contracts;
- exclusions cover scheduled maintenance, your own misconfiguration, events beyond the provider's control and services in preview.
Qualifying architecture
Many cloud SLAs for compute require you to run instances in two or more availability zones to qualify for the higher uptime commitment; a single VM may have a lower commitment or none. That redundancy has a cost: roughly double the servers plus a load balancer. Price it with the monthly cost estimator and decide whether the business needs it.
Contract terms beyond the SLA
| Term | What to look for |
|---|---|
| Limitation of liability | Usually capped at fees paid over a period; consequential losses excluded |
| Data ownership and use | You own your data; provider uses it only to deliver the service |
| Data location | Regions named; backups and support access covered |
| Security and breach notice | Provider's obligations and notice timing to you |
| Sub-processors | List published, notice of changes, right to object |
| Price changes | Notice period; whether committed rates are protected |
| Suspension | When the provider can suspend (non-payment, abuse) and with what notice |
| Termination and exit | Notice, data export window, deletion, exit assistance |
| Governing law | Which province or country's law applies; where disputes are heard |
| Language | In Quebec, adhesion contracts must first be provided in French; parties can then choose another language |
If you hold personal information, the contract is your main tool for meeting PIPEDA's requirement to provide comparable protection when a third party processes it (Principle 4.1.3). See data residency and Canadian regions.
Large providers vs smaller hosts
Large cloud providers generally use standard online terms that small customers cannot negotiate. Smaller and Canadian hosts, and managed providers, are more often willing to adjust terms such as notice periods, exit assistance or data location commitments. A negotiated term is worth more than a better SLA percentage you cannot enforce.
Planning for outages instead of relying on credits
- Keep tested backups in a second location (storage and backups guide).
- Decide your acceptable downtime and data loss, and design for them.
- Keep a simple status page or message template for customers.
- Check whether your business interruption or cyber insurance covers cloud outages, and on what conditions.
See also shared responsibility and migration and exit costs.
FAQ
Is 99.99% always better than 99.9%?
It promises less downtime, but compare the measurement, exclusions, credit size and qualifying architecture. A 99.99% promise that requires an expensive multi-zone design and pays a small credit may not be better value.
Do shared hosting plans have SLAs?
Some advertise uptime guarantees, often with credits measured in days of hosting. Read how they are measured and claimed.
Can I get compensation beyond service credits?
Usually not, because contracts make credits the sole remedy and cap liability. If an outage would be very costly, plan redundancy and consider insurance rather than relying on the contract.
Sources
- Office of the Privacy Commissioner of Canada — contracts with service providers that process personal information
- Office québécois de la langue française — French-language rules for contracts of adhesion
- Canadian Centre for Cyber Security — resilience and backup guidance
- Justice Laws Website — PIPEDA, Schedule 1
