Directors service agreement (employment contract)

About this directors service agreement

Today a company is under a statutory obligation to provide written terms of employment to a director, as to any other employee. It is advantageous to both sides to set down the package in an employment contract (for directors, also known as a directors service agreement), rather than in just a few words from the company.

This directors service agreement provides a complete legal and practical framework for any executive director. It covers all the requirements for an employment contract of a board member as well as clarifying the relationship between the company and the director so as to prevent conflicts of interest. The service contract is particularly strong on the protection of confidentiality and company secrets.

The service agreement is flexible and can be used whether:

• the term of employment is fixed or running
• the organisation is a company, charity or NGO (in the case of the latter two, the employee will be director level equivalent)

All common perquisites such as salary and benefits are also covered. Use of plain English makes editing easy and allows it to be understood by all parties.

This document provides a balance between protection for the director and for the company. If there is a difference in interests, we have favoured the company. Some of these provisions are required to comply with the law. The explanatory notes, which come with these documents, will guide you as to the importance of specific issues.

When to use this directors service agreement

• Appropriate for any director (including a Managing Director, CEO or Chairman) of any company
• Can also be used for charities and NGOs where the level of senior management is equivalent to the directors of a company
• Can be used for an employed part-time director

Employment contract features and contents

• Protects the board from criticism
• Protects the company from claims both before an industrial tribunal and in court
• Protects the director from unreasonable demands
• Up to date with the latest changes in company law
• Provides a "shopping list" of possible director perquisites
• Helps the company to comply with employment regulations
• Includes principal provisions of the employment law
• Strong on protection of employer's confidential information
• Structured so as to minimise the administrative burden of legal compliance

The directors service agreement comprises 30 paragraphs and a schedule:

• Definitions
• Entire understanding
• Start and continuity
• Job title and job description
• Place of work
• Hours of work
• Salary
• Expenses
• General Holidays
• Annual leave
• Personal/Sick leave
• Pension
• Health insurance
• Liability insurance
• Company car
• Staff handbook and company policies
• Director’s responsibilities
• Other business or employment
• Disciplinary and grievance procedures
• Confidentiality
• New intellectual property
• Garden Leave
• Termination of employment/Termination of fixed term
• Arrangements during notice period
• Summary termination
• Procedure after termination
• No competition
• Reconstruction or amalgamation
• Data protection
• Miscellaneous matters