Director Service Agreement Template

A Director Service Agreement is a contract between a company and its director that sets out the terms of their appointment, duties, remuneration, and termination provisions. It's distinct from a standard employment contract because directors have additional statutory duties under the Companies Act 2006.

Key Elements:

• Appointment terms: Start date, role, reporting structure, and time commitment
• Statutory duties: Reference to Companies Act 2006 fiduciary obligations
• Remuneration package: Salary, bonuses, share options, pension, and benefits
• Notice periods: Typically 3-12 months for executive directors
• Restrictive covenants: Non-compete, non-solicitation, and confidentiality
• Termination provisions: Grounds for termination and consequences

A proper Director Service Agreement protects both the company and director with clear, enforceable terms.

Without a Written Director Service Agreement:

• Employment tribunal claims: Without clear terms on notice periods, termination grounds, and remuneration, directors may claim unfair dismissal or breach of contract with significant compensation awards
• Disputes over remuneration: Verbal promises about bonuses, share options, or benefits become difficult to prove or disprove
• Unenforceable restrictions: Post-termination restrictions may be unenforceable without proper written documentation
• Confidentiality breaches: Without clear confidentiality obligations, protecting trade secrets becomes difficult
• IP ownership disputes: Work created by directors may not automatically belong to the company without written assignment
• Notice period uncertainty: Implied reasonable notice may differ from what you intended

Written agreements with clear terms help avoid these costly disputes.

Comprehensive Director Service Coverage:

• ✓ Appointment details — role, duties, and commencement date
• ✓ Time commitment — full-time, part-time, or specific hours
• ✓ Statutory duties — reference to Companies Act 2006 obligations
• ✓ Remuneration — salary, review provisions, and payment terms
• ✓ Bonuses — performance criteria, timing, and discretionary elements
• ✓ Share options/equity — option grants, vesting, and exercise terms
• ✓ Pension & benefits — contributions, private healthcare, car allowance
• ✓ Expenses — reimbursement policy and approval process
• ✓ Holiday entitlement — annual leave and carry-over provisions
• ✓ Notice periods — both company and director notice requirements
• ✓ Restrictive covenants — non-compete, non-solicitation, non-dealing
• ✓ Confidentiality — protection of company information
• ✓ IP ownership — assignment of intellectual property to company
• ✓ Termination provisions — grounds and consequences
• ✓ Garden leave — company's right to place director on garden leave

Related documents: Companies appointing directors typically also need Shareholders Agreement, Articles of Association, and Employment Contract for key staff.

Don't Make These Critical Errors:

• No written agreement at all: Relying on verbal understandings leads to expensive disputes over terms
• Unreasonable restrictive covenants: Overly broad non-competes (5+ years, worldwide) are unenforceable — use reasonable scope, duration, and geography
• Vague bonus terms: "Discretionary bonus" without any criteria leads to disputes — include clear performance metrics
• Missing garden leave clause: Without garden leave provisions, you may be unable to protect business during notice period
• No IP assignment: Work created by directors may not automatically belong to company without written assignment
• Inadequate termination provisions: Without clear grounds and process, termination becomes legally risky
• Forgetting statutory duties: Director agreements should reference Companies Act 2006 duties
• Using employee contract: Standard employment contracts don't cover director-specific provisions like fiduciary duties

Our template addresses all these issues with comprehensive, enforceable provisions.