Indemnity Clauses In Cleaning Contracts

Cleaning work happens inside someone else's space, often after hours, around expensive equipment, stock, keys, alarm codes and customers. So it's completely normal to ask: if something goes wrong, who pays?

Maybe a cleaner knocks over a client's computer, a key goes missing, a floor is left slippery, or a client says your team damaged a surface that was already worn. These are exactly the kinds of moments where your cleaning contract matters.

A well-drafted indemnity clause in your cleaning service agreement can make liability much clearer. It won't fix every problem, and it should work alongside insurance, exclusions and liability caps, but it can help both sides understand where the risk sits from day one.

What Is An Indemnity Clause In A Cleaning Contract?

An indemnity clause is a promise that one party will cover certain losses suffered by the other party. In a cleaning contract, it usually deals with damage, lost access items, breach of confidentiality and other risks that can come up while cleaning services are being provided.

For example, a cleaning contract might say your cleaning business must indemnify the client for losses caused by your team's negligence, wilful misconduct or breach of the agreement. That could include repairing a damaged glass door, replacing a lost access card, or covering reasonable costs caused by your failure to follow agreed site safety procedures.

Careful clause drafting matters. A broad indemnity can make you responsible for much more than you expected, even where the client also contributed to the problem. A narrower indemnity can link your responsibility to things you actually caused or controlled.

For a cleaning business, a fair indemnity often focuses on losses arising from:

• damage to the client's property caused by your team or subcontractors
• certain third-party claims connected with your negligence, subject to New Zealand personal injury and ACC rules
• lost keys, fobs, access cards or security codes in your control
• breach of confidentiality or privacy obligations
• failure to comply with agreed site rules or reasonable health and safety procedures

For a client, the indemnity should be practical enough to actually protect you if the cleaner causes loss. But it should still be connected to the cleaner's conduct, not a blank cheque for every issue that happens on site.

Who Pays If A Cleaner Damages Property?

It depends on what caused the damage and what your contract says. If the cleaner caused the damage through carelessness, using the wrong product, ignoring instructions or mishandling property, the cleaning business will often be expected to pay.

Say Mike runs a commercial cleaning business in Auckland. His team cleans a small medical clinic each night. One of his staff uses a strong chemical on a reception counter even though the site instructions say to use only a mild product. The surface stains and needs repairs. If Mike's contract says he is responsible for property damage caused by his team's negligence or failure to follow instructions, the clinic may be able to claim the repair cost from his business.

Now change the facts slightly. The counter was already cracked, the client never provided care instructions, and the same damage has happened before with other cleaners. In that case, Mike would want the contract to make clear that he isn't responsible for pre-existing damage, ordinary wear and tear, or damage caused by faulty materials or unclear instructions from the client.

Common Property Damage Scenarios

Cleaning contracts often need to deal with everyday situations like:

• scratched floors from moving furniture or equipment
• water damage from overflowing sinks, buckets or machinery
• chemical damage to benches, tiles, carpets or appliances
• broken windows, mirrors or display items
• damage to stock, electronics or client documents
• failure to lock up, leading to theft or vandalism

The clearest contracts separate damage that's your responsibility from damage that isn't. For example, your contract might say you're responsible for damage caused by your staff, contractors or equipment, but not for:

• pre-existing faults, cracks, stains or defects
• normal wear and tear
• damage caused by the client, its staff, customers or other contractors
• damage caused by unsuitable products supplied by the client
• losses that could have been avoided if the client followed agreed security steps

Photos can help too. If you're a cleaning business, it can be worth taking dated photos of existing damage before starting a new site, especially where there are delicate surfaces, expensive fittings or high-value stock.

What Should A Cleaner Liability Clause Cover?

A cleaner liability clause should clearly say what your cleaning business is responsible for, what it's not responsible for, and whether there's a cap on the amount payable. It should work with your indemnity clause rather than repeat or contradict it.

In plain English, the clause should answer these questions:

• What kinds of loss are covered?
• Does the cleaner need to have caused the loss?
• Are staff, subcontractors and agents included?
• Does the client need to notify the cleaner within a set timeframe?
• Are there exclusions for pre-existing damage or wear and tear?
• Is liability capped at a dollar amount, insurance proceeds or recent fees paid?

If you're the cleaning business, a contract review should usually avoid accepting liability for all loss connected with the premises. That's too broad. You want wording that links your liability to your breach, negligence or misconduct.

If you're the client, you don't want the clause to be so narrow that you can't recover obvious losses caused by the cleaner. For example, if a cleaner loses a master key and the building's locks reasonably need to be replaced, the contract should say how that cost is handled.

Be Careful With Words Like Any Or All

Small wording choices can make a big difference. Phrases like any loss, all liability, arising out of, or connected with can pull in losses that are only loosely related to the cleaning work. That may be more risk than a small cleaning business can sensibly price into its fees.

On the other hand, wording that's too narrow can leave the client exposed. If the contract only covers deliberate damage, the client may struggle to recover for ordinary negligence, like using the wrong cleaning product or leaving a tap running.

A balanced clause usually says the cleaner is responsible for loss to the extent it's caused by the cleaner's breach of contract, negligence, wilful misconduct or fraud. That wording is usually fairer than making one party responsible for every loss, no matter who caused it.

New Zealand Limits On Indemnities For Injury And Safety

Indemnities can be useful, but they aren't a magic way to transfer every legal risk. In New Zealand, personal injury and health and safety need extra care.

First, personal injury compensation is affected by the Accident Compensation Corporation scheme. Because ACC covers many personal injury claims in New Zealand, a cleaning contract shouldn't assume that personal injury damages can be shifted between the parties in the same way as a broken window or damaged laptop. There may still be other costs or third-party claims to think about, but the wording needs to be considered in light of ACC.

Second, the Health and Safety at Work Act 2015 places duties on businesses and officers that can't simply be contracted away. A client and a cleaning business may both have health and safety duties at the same site. Your contract can allocate practical responsibilities, such as who provides site induction, who supplies safety data sheets, or who reports hazards. But it can't remove a party's statutory duties under health and safety law.

There's also a clear line around penalties. A contract shouldn't try to indemnify someone for Health and Safety at Work Act fines or infringement fees. New Zealand law prohibits indemnities for those fines and infringement fees, so wording that tries to make another party cover them can create more problems than it solves.

A sensible cleaning contract can still deal with health and safety in a practical way. For example, it can require the client to tell the cleaner about site hazards, provide safe access, and keep alarm and access information up to date. It can also require the cleaning business to train staff, use appropriate products, follow agreed site rules and promptly report incidents.

Unfair Contract Terms In Standard Form Contracts

Many cleaning contracts are standard form contracts. In other words, one side prepares the document and the other side has little real ability to negotiate it. If that's the case, New Zealand unfair contract terms rules under the Fair Trading Act 1986 may apply.

These rules can apply to standard form consumer contracts. They can also apply to standard form small trade contracts. For small trade contracts, the regime can apply where the contract is part of a trading relationship that doesn't exceed the $250,000 annual value threshold when the relationship first arises.

This matters because a very one-sided indemnity, exclusion or liability cap may be vulnerable if it creates a significant imbalance, isn't reasonably necessary to protect legitimate interests, and would cause detriment if relied on. For example, a clause that makes a small cleaning business responsible for all losses at a large commercial site, including losses the client caused, may be difficult to justify.

The safer approach is to keep indemnities proportionate, transparent and tied to real risk. Spell out what the clause covers. Avoid hiding major liability terms in fine print. Make sure the clause protects a legitimate interest, such as property damage, lost access devices, confidentiality or security, rather than simply shifting all risk to the weaker party.

How Insurance And Liability Caps Fit In

Your indemnity clause should match your insurance. If your contract makes you responsible for losses that your insurance doesn't cover, you may be taking on uninsured risk without realising it.

Cleaning businesses commonly consider public liability insurance, statutory liability insurance, employers' liability insurance and cover for tools, equipment and vehicles. The right mix depends on the sites you clean, the size of your team and the kind of work you do.

It's also common for cleaning contracts to require the cleaning business to hold a minimum level of public liability insurance. If you're the cleaner, check that the required amount is realistic for the contract value and the site risk. A small domestic cleaning job may not need the same insurance requirements as a large commercial facility with expensive equipment.

Liability caps are another important tool. A cap might limit liability to a fixed dollar amount, the amount recoverable under insurance, or a multiple of recent fees paid under the contract. The best option depends on the arrangement. A cap that's too low may not protect the client, while a cap that's too high may expose the cleaner to risk that's out of proportion to the contract price.

Some losses are often carved out of caps, such as fraud, wilful misconduct, confidentiality breaches or damage that's covered by insurance. If you use carve-outs, make sure they're deliberate and clearly drafted.

Practical Tips Before You Sign

Before signing a cleaning contract, take a few minutes to test the indemnity against real-life examples. Ask what would happen if a key was lost, a floor was scratched, a staff member ignored a site instruction, or the client failed to warn the cleaner about a known hazard.

If you're a cleaning business, you should also check whether your subcontractors are covered. If you indemnify the client for your subcontractors' actions, your subcontractor agreements should pass through the right obligations, including confidentiality, site rules, insurance and care of property.

If you're the client, think about access and evidence. You may want incident reporting obligations, photo evidence, timeframes for notifying damage, and a process for urgent repairs or lock replacements. Clear processes can stop a small problem becoming a costly dispute.

Most importantly, avoid treating the indemnity as a standalone clause. It should line up with the services description, site rules, insurance requirements, exclusions, liability cap, termination rights and dispute resolution process. When those clauses work together, both sides know what to do when something goes wrong.

Key Takeaways

• An indemnity clause can help allocate risk for property damage, lost access items, confidentiality breaches and other losses connected to cleaning work.
• The clause should link liability to conduct the cleaner actually caused or controlled, such as negligence, breach of contract or wilful misconduct.
• In New Zealand, personal injury must be considered in light of ACC, and contracts can't transfer health and safety duties or indemnify Health and Safety at Work Act fines or infringement fees.
• If the contract is a standard form consumer or small trade contract, unfair contract terms rules may apply, including the $250,000 annual trading relationship threshold for small trade contracts.
• Indemnities should work with insurance, exclusions, liability caps and practical site processes so the contract is fair and usable.

If you'd like help with cleaning service agreements, indemnity clauses, liability caps or contract reviews, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.