Letter of Reduction in Contract Services due to COVID-19

Different companies sign contracts with different service providers. With the help of these contracts, the services to be rendered by the service providers are specified. Once the contract is signed, the service provider is responsible to provide those services which were mentioned in the contract and the company is obligated to pay the service provider against those services.

The contract of services is also signed between the employer and the employee. The employee has a right to increase or reduce the contract services if it is required.

What is a letter of reduction in contract services?

Many companies are forced to reduce the total number of working hours of all the people working in those companies. To implement this, they reduce the contract services of the service provider. When this happens, the company must write a letter to the service provider informing him about the company’s decision to reduce the number of services.

Reduction in services due to COVID-19:

The coronavirus pandemic has changed the way the world used to operate. Initially, the policy of stay at home was adopted. However, companies have started to operate again but, with different strategies. Companies have been asked to operate by reducing the number of working hours so that the likelihood of contracting the virus can be reduced.

Those who work in those companies should be told about this decision of reducing the number of hours and services so that they can prepare themselves accordingly.

Due to COVID-19, the world is going through a stringent financial crisis. Many big enterprises are forces to lay off their workers because of not being able to afford to pay the salaries to all of them. Furthermore, the need for workers also reduces when contract services are reduced. In this situation, the companies retain senior employees only and reduce their services.

How to write a letter of reduction in contract services?

For the recipient of this letter, it may not be good news to have a reduction in contract services because it also causes a reduction in annual accruals and salaries. Therefore, when you write this letter, make sure that you use appropriate words and tone to break this news. Here are a few things that you must include in this letter:

  • Inform about a reduction in services:

The letter should be started straight by informing the recipient about the decision of the company to reduce the contract services. Since it is not something good, you should regretfully announce this.

  • Give reason:

There can be many reasons that lead someone to take such a tough decision. In this particular scenario, the reason is the Coronavirus pandemic. Talk about COVID-19 and how it has impacted the company. Mention that your company is going through to a difficult time and therefore, it has decided to take that challenging decision.

  • Give details:

Your policies regarding reduction in services should be clearly explained in the letter. Tell the reader that how the reduction will come about and what changes the recipient should expect. If by reduction in services you mean reduction in working hours, clearly explain this in the letter. If there will be a reduction in the annual salary of the employee along with working hours, it should also be detailed.

  • Professionally end the letter:

Just like any other formal letter, this letter should also be ended by asking the employee to contact you in case he has any question in his mind. This will prompt the employee to feel free to contact you.

Below is a sample letter for a reduction in contract services. This letter is being written to a service provider who has signed this contract with the promise to provide the services as required by the hiring company. The sample letter lets the service provider know about this decision politely by announcing regretfully.

Sample letter:

Name of the employer:
Name of the company:
Address of the company:
Contact details of the company:

Date: ——————

Name of contractor:
Address of the contractor:
Contact details of the contractor:

RE: Revision of contract services between [X] and [Y]

Dear (name of the contractor),

I am very much regretful to inform you that due to the COVID-19 pandemic, we have decided to reduce the contract services of every individual working with us. As a result, the working hours of all the employees will also be reduced. Regrettably, your work schedule will be reduced from fulltime to 60% effective from now on. Apart from the reduction in contract services, there will be a reduction in the accrual of annual leave as well as an annual salary. 

We are forced to reduce the contract services owing to the pandemic across the world. 

Please let me know if you have any problem or query. 


Signatures of the authority
Your designation in the company

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