What does termination for convenience mean in my subcontract?
A termination for convenience clause lets the builder end your subcontract at any time, without cause and without breach — you can be performing perfectly and still be off the job. The clause itself is market-common; what separates a fair version from a dangerous one is the compensation: you should be paid for all work performed plus reasonable demobilisation costs. A clause that pays only for work done, or less, is high risk.
What a fair clause pays
At minimum: all work performed to the termination date valued at contract rates, materials procured and committed for the job, and reasonable demobilisation — getting your people and gear off site costs money the builder's decision caused. The versions to fear are those that exclude demobilisation, exclude committed materials, or pay some discounted 'assessed value' in the builder's discretion.
Also check what the clause does to your other entitlements. Some drafting uses convenience termination to wash away accrued claims — variations and EOT costs still unresolved at termination. Accrued rights should survive termination expressly.
The commercial reality
You're unlikely to get the clause deleted — it's usually mirrored from the head contract. The winnable negotiation is the compensation basis and a notice period long enough to wind down properly. Loss of profit on the unperformed balance is the ambitious ask; work done plus demobilisation plus committed costs is the line to hold.
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Scan my subcontract freeCommon questions
Can I claim loss of profit if I'm terminated for convenience?
Only if the clause says so, and most are drafted precisely to exclude it. That exclusion is market-common; the fights worth having are payment for all work done, committed materials and demobilisation costs.
Is a termination for convenience clause a red flag on its own?
No — it appears in a large share of Australian subcontracts, usually passed down from the head contract. The red flag is a version with no-cost or under-compensated termination. Read the payment paragraph of the clause, not just its heading.
Keep reading
General information for Australian subcontractors, not legal advice — statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.