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A service bureau agreement governs the provision of outsourced processing or data-handling services by a specialised bureau on behalf of client businesses. Typical services include payroll processing, document management, data entry, print and mail fulfilment, and accounting bureau functions. The agreement covers service scope, processing timescales, data handling obligations, and fees.

Where the bureau processes personal data on the client's instructions, it acts as a data processor under UK GDPR and the Data Protection Act 2018. The agreement must include mandatory data processing clauses covering purpose limitation, security measures, sub-processor authorisation, data breach notification, and return or deletion of data at contract end. Omitting these clauses is a regulatory breach.

The agreement should include a service level schedule with measurable targets such as processing turnaround times, error rates, system availability percentages, and response times for corrections. It should specify service credits or other remedies for breaches of service levels, and a process for raising and escalating performance issues. Vague quality descriptions invite disputes.

The bureau is liable for losses caused by its failure to meet the standard of reasonable care and skill implied by the Supply of Goods and Services Act 1982. Many bureau agreements cap liability at a multiple of the fees paid in a given period. Clients should assess whether the cap is adequate for the scale of potential losses and consider requiring professional indemnity insurance from the bureau.

Subcontracting is permissible if the agreement allows it, but the bureau remains primarily liable to the client for the subcontractor's performance. For data processing subcontracting, UK GDPR requires the client's (data controller's) prior specific or general authorisation. The bureau should flow down all relevant obligations to any sub-processors it appoints.

The agreement should require the bureau to maintain appropriate technical and organisational measures to protect client data and systems, including encryption, access controls, regular security testing, and incident response procedures. These obligations align with Article 32 of UK GDPR for personal data and reflect best practice for all sensitive client information regardless of whether it constitutes personal data.

Data, reports, and outputs generated from the client's data typically remain the client's property. Bureau-proprietary processing software and methodologies remain the bureau's property. The agreement should grant the client a licence to use any bureau tools embedded in the outputs, and should address what happens to the client's data on termination, including export formats and timescales.

Bureau services are often business-critical for the client. The agreement should require the bureau to maintain a tested business continuity plan, specify recovery time and recovery point objectives, and grant the client the right to audit continuity arrangements. Transition assistance obligations on termination, allowing the client to migrate to a new provider without disruption, are also essential.