Kill Fees and Cancellation Clauses: A 2026 Contract Guide
A client cancels a project halfway through. You have done real work, blocked out real time, and now the brief is dead. Do you get paid? That answer was decided long before the cancellation — in your contract. Here is how kill fees, cancellation clauses, and deposits protect a freelancer in 2026.
The Delivvo team· May 22, 2026 9 min read
Here is a situation every freelancer eventually meets. A project is underway. You have done a meaningful chunk of the work, you have blocked the next two weeks for it, you have turned down other inquiries to protect the schedule. Then the client emails: priorities changed, the project is cancelled, sorry.
Do you get paid for what you did and what you reserved? The honest answer is that the question was already decided — not by the cancellation email, but by your contract, weeks earlier. A freelancer with the right clauses gets paid. A freelancer without them gets an apology. This is the guide to the three clauses that decide which one you are.
Kill fee, cancellation fee, deposit — three different things
These terms get used loosely, so it is worth separating them, because they protect different moments.
A kill fee is a payment the client owes if they cancel a project *after work has begun*. It compensates you for the work completed and, importantly, for the income you gave up by committing the time. The term comes from publishing, where magazines have for decades paid writers a portion of an agreed fee — commonly in the range of a quarter to half of it — for a commissioned piece that gets cancelled before publication. The concept has since become standard across design, development, photography, and other fields where projects involve significant preliminary work (SitePoint, clauses to include in a freelance contract).
A cancellation fee is the close cousin: a payment owed if the client cancels *before work has started* but after the agreement was signed — for instance, you booked the time, declined other work, and then the client pulled out the week before the start date. The distinction is real: a kill fee covers work begun; a cancellation fee covers commitment made ().
A deposit is the simplest and most powerful: money paid up front, before any work, that the freelancer keeps regardless. It is not a fee triggered by cancellation — it is money already in your account when cancellation happens.
How to structure a kill fee
A kill fee only works if it is specific. "The client will pay a reasonable fee if they cancel" is not a clause; it is an argument waiting to happen. There are three common structures, and any of them works as long as it is written down precisely.
The simplest is a flat percentage of the total project value — for example, 50 percent of the full fee if the project is cancelled at any point after work begins. Easy to understand, easy to enforce.
The most common in practice is a phased or tiered model tied to how far the project has progressed. A typical shape: cancel during the first phase and the client owes 25 percent; cancel after the midpoint and they owe 50 percent; cancel in the final phase and they owe the full amount, because by then nearly all the value has been created.
The third is completed work plus a percentage of the remainder — the client pays for everything finished to date, plus a slice of the value of what was cancelled. On a $20,000 project with $8,000 of work done, a 25 percent kill fee on the remaining $12,000 adds $3,000, for $11,000 total. This model feels fairest to clients because it ties most of the bill to delivered work.
Whichever you choose, write the trigger and the number explicitly: what counts as "cancellation," what counts as "work begun," and exactly what is owed at each stage.
A freelancer at a laptop with a notebook reviewing the cancellation terms of a client agreement
The deposit is your first line of defence
For most solo freelancers, the deposit does more practical work than the kill fee — because it does not depend on collecting anything *after* a relationship has soured.
A kill fee is a debt the client owes you once they have already decided to walk away. Collecting it means invoicing someone who has mentally closed the project, and if they simply do not pay, your only recourse is escalation. A deposit avoids all of that. Money paid before the work starts is money you already hold; cancellation does not require you to chase anyone for it.
A common, defensible structure is a deposit of a third to a half of the project fee, paid before work begins and explicitly non-refundable once work has started. Pair that with a kill fee for the balance, and a cancelled project still pays: the deposit covers the early commitment automatically, and the kill fee covers the work done beyond it. The deposit is the floor you can count on; the kill fee is the part you may have to invoice for.
When there is no clause and the project dies
Suppose the worst case: a project just collapsed, and your contract said nothing about cancellation. Are you simply out of luck?
Not entirely — but your position is much weaker, and that is the lesson to carry into the next contract. With no kill fee clause, you generally still have a claim for the *work you actually completed*, because the client received value and a reasonable expectation of payment for delivered work usually survives even a thin agreement. What you have almost certainly lost is any claim for the *future* income — the time you blocked, the work you turned away — because nothing in writing promised you that.
So the practical move when a project dies without a clause is: invoice immediately and specifically for completed work, itemised, with whatever evidence of delivery you have, and frame it as routine billing rather than a negotiation. Many clients will pay for genuine completed work without much argument; what they resist is open-ended demands.
If the client refuses even that, your escalation path is the same as for any unpaid invoice — a formal demand, then small-claims court or a collections route for larger sums. It is winnable for completed work; it is slow and uncertain.
The honest summary: a missing clause does not erase your right to be paid for work done, but it erases your protection for work committed. That asymmetry is the entire argument for writing the clause *before* you need it.
The law is catching up to unpaid freelancers
Cancellation clauses do not exist in a vacuum — and the legal environment around freelance payment has shifted in a way that strengthens them.
New York State's Freelance Isn't Free Act, which took effect statewide on August 28, 2024, now requires a written contract for most freelance engagements worth $800 or more, and that contract must state the rate, the method of payment, and the date by which the freelancer will be paid (New York State Department of Labor, Freelance Isn't Free Act). The law also gives freelancers real teeth: a hiring party that fails to pay as agreed can face double damages and attorney's fees, and a hiring party that cannot produce the contract faces a legal presumption that the freelancer's stated terms are the agreed ones (Epstein Becker Green, Freelance Isn't Free Act takes effect throughout New York State).
The relevance to cancellation is direct. If the law now requires a written contract that states what you are owed and when, the kill fee, cancellation fee, and deposit are exactly the terms that *belong* in that document — and a properly written cancellation clause becomes part of the agreed terms the law will hold the client to (Hodgson Russ, New York State's Freelance Isn't Free Act). New York is one jurisdiction, but it reflects a wider direction: a clear, written cancellation clause is no longer a nice-to-have. It is the enforceable core of getting paid for a dead project.
Beyond New York — a wider shift
New York's law is the most prominent example, but it is not an isolated one, and freelancers anywhere should read it as a signal rather than a local quirk.
Los Angeles and several other US cities have their own freelance-protection ordinances, and the direction across them is consistent: require a written contract, require it to state what is owed and when, and give the freelancer a real remedy when the hiring party does not pay. The specifics vary by jurisdiction — thresholds, deadlines, the size of the penalty — so a freelancer should check the rules where *they* are based and where their clients are.
The reason this matters for cancellation clauses is simple. These laws make the written contract the legally operative document. A handshake or an email thread is no longer the strongest version of an agreement available to you — and a contract that the law expects to exist is the natural and enforceable home for a kill fee, a cancellation fee, and a non-refundable deposit.
For freelancers outside the US, the same logic applies through different mechanisms — late-payment regulations and standard commercial-contract law — and the UK's recent late-payment reform is one example of the broader trend toward forcing clarity and timeliness into freelance payment. Wherever you are, the takeaway is the same: the written, signed contract is the instrument that protects you, and the cancellation terms only protect you if they are in it.
Sample wording to adapt
Treat this as a starting point, not legal advice — and adapt it to your jurisdiction:
"If the Client cancels the project after work has begun, the Client shall pay a kill fee equal to all work completed to the cancellation date plus 25 percent of the value of the remaining contracted work. The deposit paid at the start of the project is non-refundable once work has begun and is credited against amounts owed. All sums due under this clause are payable within 14 days of the cancellation date."
That short paragraph does four things at once: it names the trigger, sets the number, makes the deposit non-refundable, and gives a payment deadline. For a clean base contract to add it to, the roundup of free freelance contract templates is a sensible place to start. A cancellation clause also pairs naturally with the clauses that stop projects from drifting in the first place — see how to stop scope creep on freelance projects — and with a tight client onboarding checklist that gets the deposit collected before any work happens.
Delivvo gives freelancers a branded client portal where the proposal, the contract, and the deposit invoice are sent and signed together — so the cancellation clause is agreed and the deposit is collected before work begins, not negotiated after a project has already died. See how it works →
The takeaway
Whether a cancelled project pays you is not decided when the client cancels. It is decided when the contract is signed. A freelancer with a deposit, a kill fee, and a clear cancellation clause turns a dead project into a partial payment automatically. A freelancer without them turns it into a loss and an apology.
Collect a deposit before you start. Write a kill fee with a specific trigger and a specific number. Put both in a written contract — which, in a growing number of places, the law now expects anyway. The clause you write in five quiet minutes at the start of a project is the clause that pays you when the project falls apart.
