KPI agreement
A KPI agreement is a contract, or part of one, setting key performance indicators that one or both parties must meet, and stating the consequences, such as bonuses, service credits or termination rights. It is not a distinct legal category; it is enforced under ordinary contract law.
How BC law treats it
A payment stipulated on breach that is not a genuine pre-estimate of loss may be struck down as a penalty, so liquidated damages and service credits must be drafted carefully. In employment, missing KPIs is rarely just cause, and termination without cause requires notice under the Employment Standards Act and the common law.
What it means for your business
Clearly defined KPIs and remedies help a BC business manage supplier or employee performance.
Risks and common mistakes
Treating missed KPIs as automatic grounds to dismiss an employee without notice can lead to a wrongful dismissal claim.
Fulcrum's business contract lawyers can help with these issues.
General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.
