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In 2025, nothing is ever set in stone.
Having an effective Cancellation Policy can provide critical protection for your business in an increasingly unpredictable environment, whether that’s due to sudden schedule shifts, unforeseen closures, or other market disruptions.
Cancellation Policies provide not only financial security for your business but also clear expectations for your customers.
Although they are not mandated by law, a well-drafted Cancellation Policy can save you considerable expense and minimise disruptions to your operations.
When implementing a Cancellation Policy, it is important to ensure its terms and conditions are fair and transparent.
What Is A Cancellation Policy and Why Do I Need One?
According to the ACCC, a customer generally has a right to cancel a service when:
- A reasonable level of skill and care has not been provided
- The service or product is unfit for the purpose requested
- The service or product was not delivered within a reasonable time when no fixed end date was agreed upon.
However, consumers do not have a right to cancel when:
- They simply change their mind
- They insist on a service in spite of your professional advice
- They fail to communicate their needs adequately to your business.
A Cancellation Policy provides security by outlining what happens if a customer cancels an engagement.
It should clearly communicate to your customers the process and potential financial implications if they cancel an arrangement with your business.
Cancellation Policies can be utilised in various situations. Consider the example below:
| Example Your business provides a specialised service which requires advance booking. Customers schedule appointments well in advance. Two hours before the service is due, a customer calls to cancel their appointment. You have already purchased materials, organised staff, and turned down other bookings for that period. As a result, your business incurs significant losses due to the short-notice cancellation. |
If the business in the above example had an effective and fair Cancellation Policy in place, they would likely have mitigated those costs by requiring an earlier notice period.
In this instance, a robust Cancellation Policy might stipulate that customers must advise the business of a cancellation at least 48 hours before their appointment. It would also detail how to communicate cancellations and whether any cancellation fee will be applied.
For further guidance on drafting clear contractual terms, you might also refer to our article on What Is A Contract?, which can help ensure that your Cancellation Policy is legally enforceable and fair.
This way, your business may avoid incurring unnecessary out-of-pocket expenses while maintaining a strong, professional relationship with your customers.
Where Should My Cancellation Policy Go?
Your Cancellation Policy is generally set out in your business’s terms and conditions.
It may also be prominently displayed on your website, in your reception area, or on your business’s notice board to ensure that it is easily accessible to your customers.
Alternatively, it can be attached at the bottom of an email confirming a customer’s engagement with your service, so it is agreed upon at the point of booking.
Whichever method you choose, it is vital to ensure that your Cancellation Policy is communicated clearly and is readily available to your customers.
What To Include In Your Cancellation Policy
Your Cancellation Policy can be uniquely tailored to your business, as long as the terms remain fair and transparent.
This may include adjusting your cancellation timeline (for example, from 48 hours to 2 days) depending on what works best for your operations.
Keep in mind that your Cancellation Policy should consider the specific circumstances of your service and your ability to accommodate last-minute changes.
1. The Cancellation Process
To create an effective Cancellation Policy, detail exactly how your customers should cancel their engagement. Outline the clear steps they must follow, whether by phone, email, or via an online booking platform.
This process should be consistently available where your Cancellation Policy is mentioned, leaving no room for ambiguity.
Simply stating that “cancellation fees will apply if you fail to cancel on time” isn’t enough. You need to provide a step‐by‐step guide on the cancellation procedure, including time frames and potential fees (if applicable).
2. Cancellation Timeframes
Your Cancellation Policy should specify exactly when customers need to cancel to avoid a fee.
This timeframe will be tailored to the logistics of your service – for example, requiring notice well before your staff and resources are allocated.
For instance, if you operate a catering service, you might require a minimum 48-hour notice to avoid cancellation fees and potential waste of ingredients and labour.
3. Cancellation Fees
If your Cancellation Policy includes a cancellation fee, this fee should be explicitly detailed within the policy.
Such a fee must be reasonable and reflective of the actual costs your business incurs when a customer cancels without adequate notice.
For example, in a hairdressing business, if a customer fails to cancel 36 hours before their appointment, your policy might state that they will be charged an amount equivalent to the minimum cost of a haircut.
Remember, you cannot charge a customer’s credit card without prior notice, nor can you impose cancellation fees for circumstances beyond the customer’s control, such as extreme weather events.
How To Ensure Your Cancellation Policy Is Fair
Australian Consumer Law prohibits businesses from enforcing policies with unfair terms.
Terms may be deemed unfair if they:
- Create an imbalance in the rights between you and your customer
- Are unreasonable in the current circumstances
- Result in a financial or operational detriment to a small business
If certain terms are considered ‘unfair’, they will be declared void and unenforceable, which means neither party can rely on them. This is why it is critical to design your Cancellation Policy with fairness and balance in mind.
Ensure that your policy is both reasonable and relevant to your unique business operations, and consider periodic reviews to align with any changes in industry practice or legal standards.
In 2025, many businesses are also adopting digital cancellation systems that integrate seamlessly with appointment scheduling, improving communication and reducing the likelihood of disputes. Incorporating modern technology can further enhance the fairness and efficiency of your Cancellation Policy.
Need More Help?
Having an effective Cancellation Policy can help your business gain greater security when a customer cancels an engagement at the last minute.
Getting a lawyer involved to help establish or review your Cancellation Policy can be invaluable in ensuring your terms comply with current Australian Consumer Law and reflect the genuine costs incurred by your business.
We are here to help! Reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or call 1800 730 617.
As businesses evolve in 2025, regularly reviewing your Cancellation Policy is essential for ongoing protection and clarity. We recommend that you periodically conduct a legal health check – for example, through our Legal Health Check service – to ensure that all your business documents, including your Cancellation Policy, remain accurate and enforceable in today’s dynamic market.
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