How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to:
✅ Three Ways to Use This Tool
1. Audit existing agreements: Review your current director service agreement against all 56 compliance points
2. Draft new agreements: Ensure you don't miss any essential legal requirements
3. Compare with solicitor drafts: Verify your lawyer has covered everything
⚠️ Understanding Importance Levels
🔴 Critical: Must have - omission creates serious legal risk
🟡 Important: Should have - recommended for proper protection
🔵 Recommended: Best practice - enhances clarity and enforceability
1. Parties & Definitions (4 items)
Company's Full Legal Name and Registered Details
Must include exact legal name (as registered at Companies House), company registration number, and registered office address. Essential for enforceability and identification.
🔴 Critical
Director's Full Legal Name and Personal Address
Must match director's legal name exactly. Include personal address for service of notices and legal documents. Critical for identifying the individual entering the agreement.
🔴 Critical
Clear Agreement Date and Commencement Date
Date agreement is signed by both parties and when services commence. These can differ. Critical for calculating probation, notice periods, termination dates, and limitation periods.
🔴 Critical
Director's Title/Position Clearly Specified
Exact role (e.g., Chief Financial Officer, Non-Executive Director). Important for defining scope of responsibilities and fiduciary duties.
🟡 Important
2. Appointment & Statutory Duties (5 items)
⚠️ Statutory Duties Warning
Directors owe statutory duties under Companies Act 2006 regardless of agreement terms. These include: duty to act within powers, promote company success, exercise independent judgment, exercise reasonable skill and care, avoid conflicts of interest, not accept benefits from third parties, and declare interest in proposed transactions. Your agreement should acknowledge these statutory duties.
Acknowledgment of Statutory Duties (Companies Act 2006)
Agreement must explicitly reference that director is subject to Companies Act 2006 duties. Should list the 7 statutory duties and confirm director understands these apply regardless of agreement terms.
🔴 Critical
Confirmation of Executive or Non-Executive Status
Must clearly state if executive (full-time employee with operational role) or non-executive (independent, strategic oversight only). Different duties, benefits, and notice periods apply.
🔴 Critical
Specific Duties and Responsibilities Detailed
List principal duties (financial management, board reporting, risk oversight, etc.). Should be clear and specific to avoid disputes about scope of role and performance expectations.
🔴 Critical
Board Meeting Attendance Requirements
Specify minimum attendance (e.g., 90%), whether by phone/video acceptable, and notice requirements for absence. Directors must attend board meetings to fulfill their fiduciary duties.
🟡 Important
Time Commitment and Hours Specified
Executive directors: full-time or specific hours. Non-executive: X days per month. Important for defining availability and commitment level.
🟡 Important
3. Term & Termination (6 items)
Agreement Term Specified (Fixed or Indefinite)
Fixed term has specific end date. Indefinite continues until terminated by either party. Most director appointments are indefinite with notice periods. Must be clear to avoid disputes.
🔴 Critical
Notice Period for Termination (Both Parties)
Directors typically have longer notice (3-6 months) than employees. Must be specified and should ideally be same for both company and director unless specific justification exists. Supports IR35 compliance.
🔴 Critical
Grounds for Immediate Termination (Summary Dismissal)
Events allowing termination without notice/payment: fraud, gross misconduct, serious breach of duties, criminal conviction, insolvency. Should be specific and reasonable to be enforceable.
🟡 Important
Garden Leave Provisions
Right to require director to stay away from work during notice period while being paid. Common for protecting sensitive information but must be reasonable duration.
🟡 Important
Statutory Removal Rights Acknowledged
Directors can be removed by shareholders via ordinary resolution (50%+) with special notice under Companies Act 2006 s.168. Agreement should acknowledge this statutory right exists.
🟡 Important
Payment for Work Completed Upon Termination
Company must pay all fees/salary earned up to termination date, plus any accrued benefits (unused holiday, bonuses, etc.). Protects director from working without compensation.
🔴 Critical
4. Remuneration & Benefits (7 items)
Clear Remuneration Structure (Salary or Fee)
Executive directors receive salary. Non-exec receive fees. Amount must be exact and in writing. Payment frequency specified (monthly, quarterly, annually). Ambiguity leads to disputes.
🔴 Critical
Tax and National Insurance Treatment
Salary/fees subject to PAYE income tax and National Insurance. Must be deducted at source by company. Agreement should confirm director responsible for any additional tax liability and company operates PAYE.
🟡 Important
Bonus or Performance Incentive Scheme (if applicable)
If director eligible for bonus: specify criteria, targets, calculation method, and payment terms. Typical: up to 30-50% of salary based on company and individual performance.
🟡 Important
Share Options or Equity Incentives (if applicable)
If director receives shares or options: specify number, exercise price, vesting schedule, and terms. Should reference any separate share scheme documents.
🔵 Recommended
Additional Benefits and Allowances Specified
Company car, mobile phone, private health insurance, life insurance (typically 4x salary), professional fees/subscriptions, dining allowance. Should be clear which are provided, value, and any conditions.
🟡 Important
Expense Reimbursement Policy
Company reimburses reasonable business expenses (travel, accommodation, entertaining clients) with receipts. Should specify any approval thresholds or exclusions.
🟡 Important
Review and Adjustment Provisions
When and how remuneration is reviewed (annually, CPI, performance review). Whether discretionary or contractual. Protects both parties by setting expectations.
🔵 Recommended
5. Holiday Entitlement (3 items)
Statutory Holiday Entitlement Specified
Executive directors: minimum 28 days including bank holidays (statutory minimum). Non-execs: typically no formal holiday entitlement. Must state days and whether inclusive of bank holidays.
🔴 Critical
Holiday Accrual and Carry-Over Terms
Whether unused holiday rolls over (max 5 days per Working Time Regulations), payment in lieu on termination, or must be taken by year end. Should clarify when holidays are taken by agreement with board.
🟡 Important
Sick Leave and Long-Term Absence Policy
Whether statutory sick pay applies, entitlement periods, notification requirements, and how occupational sick pay relates to statutory minimums. Important for protecting both director and company.
🟡 Important
6. Pension (3 items)
Pension Scheme Enrollment (Auto-Enrolment Requirement)
Executive directors who are employees must be auto-enrolled if earning above £10,000/year (April 2024 threshold). Company must contribute minimum 3% of qualifying earnings. Non-execs typically exempt.
🔴 Critical
Enhanced Pension Contribution Terms (if applicable)
Many directors receive 5-15% employer pension contributions above statutory minimum. Amount, calculation basis, and scheme details should be specified. Should confirm whether salary sacrifice applies.
🟡 Important
Pension Continuation on Termination
What happens to pension contributions and accrued benefits when director leaves. Confirms scheme rules apply and director entitled to obtain pension statement.
🔵 Recommended
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7. Confidentiality & Intellectual Property (6 items)
⚠️ Fiduciary Duty Warning
Directors owe fiduciary duties to the company including duty of confidentiality and to act in company's best interests. These apply during directorship and indefinitely after regarding company information. Confidentiality clauses are essential and typically survive termination without time limit.
Confidentiality Obligation (During and Post-Termination)
Director must keep all confidential information secret during appointment and indefinitely after. Should cover: business strategy, financial data, customer lists, trade secrets, board discussions, negotiations.
🔴 Critical
Clear Definition of "Confidential Information"
Specify what constitutes confidential information to avoid disputes. Should include: strategic/business information, financial data, customer information, supplier information, board minutes, proprietary processes.
🟡 Important
Exceptions to Confidentiality (Legally Required Disclosure)
Standard carve-outs: information that's public, independently developed, legally required to be disclosed (e.g., to regulators/courts), or required by law/court order. Protects director from liability if compelled to disclose.
🟡 Important
Intellectual Property Ownership Clearly Stated
Any IP created by director in course of duties belongs to company. Should state explicitly: "All IP shall be owned by the Company" and include assignment of future rights. Covers patents, trademarks, copyrights, trade secrets.
🔴 Critical
Return/Destruction of Confidential Materials on Termination
Director must return or destroy all confidential information immediately upon termination. Should specify documents, data, copies, notes. Prevents director retaining sensitive company information.
🟡 Important
8. Post-Termination Restrictions (4 items)
⚠️ Restrictive Covenants - Enforceability
Post-termination restrictions on directors must be carefully drafted to be enforceable. Courts scrutinize these heavily. Restrictions should be reasonable in duration (typically 6-12 months) and scope (by geography, industry, or specific clients). Overly broad restrictions will be struck down as unenforceable.
Non-Competition Clause (if included)
Prevents director competing with company for period after leaving (typically 6-12 months). Must be reasonable in duration, geographic scope, and definition of "competing business". Courts strike down unreasonable restrictions.
🟡 Important
Non-Solicitation of Clients/Customers
Prevents director from soliciting company's clients/customers for specified period post-termination (typically 6-12 months). Should be limited to clients/customers director had material dealings with.
🟡 Important
Non-Solicitation of Employees
Prevents director from hiring company employees post-termination (typically 6-12 months). Should be limited to employees director worked with directly. Protects against key staff poaching.
🔵 Recommended
9. Conflicts of Interest (3 items)
Conflict of Interest Disclosure Requirement
Director must disclose any situations where they have (or can have) direct or indirect interest that conflicts with company interests. Includes family interests, share holdings, other directorships. Required by Companies Act s.177.
🔴 Critical
Voting Restrictions on Conflicted Matters
Director cannot vote on board matters in which they have material interest unless board/articles authorize. Agreement should confirm director must absent themselves from discussions of conflicted matters.
🟡 Important
Outside Directorships and Business Interests Disclosure
Director must disclose any other directorships or business interests. Agreement should specify whether other roles are permitted (usually yes if not competing) and require board approval. Executive directors may have fewer outside roles than non-execs.
🟡 Important
10. Indemnity & Insurance (4 items)
✅ Directors' Liability Protection
Directors can be personally liable for certain breaches of duty. Companies Act 2006 permits company to provide indemnity insurance and D&O insurance, subject to limitations. Cannot indemnify for fraud, dishonesty, or breaches that cannot be limited by law. Standard practice is for companies to maintain D&O insurance for all directors.
Directors' & Officers' Liability Insurance Requirement
Company maintains D&O insurance covering director's personal liability for claims arising from breach of duty, errors, omissions. Should specify whether company pays premiums and minimum coverage amount.
🟡 Important
Company Indemnity (within Legal Limits)
Company indemnifies director against liabilities and costs incurred in performance of duties, subject to Companies Act 2006 limitations. Cannot indemnify for fraud, dishonesty, breach of duty, or where law prohibits.
🟡 Important
Exclusions from Indemnity (Specified)
Agreement should confirm indemnity does NOT cover: fraud, dishonesty, gross negligence, breach of fiduciary duty, breach of confidentiality, criminal acts, or breaches law prohibits indemnifying. Essential for legal compliance.
🔴 Critical
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11. Data Protection & GDPR (3 items)
Consent to Data Processing (GDPR Compliance)
Director consents to company processing their personal data for employment, payroll, benefits, tax purposes in accordance with UK GDPR and Data Protection Act 2018. Should reference company's privacy notice.
🟡 Important
Compliance with Data Protection Laws
Director agrees to comply with GDPR, Data Protection Act 2018, and company's data protection policies when processing or accessing personal data. Important if director handles customer/employee data.
🟡 Important
Data Protection Rights and Responsibilities
Reference director's rights (access, correction, erasure) and responsibilities under GDPR. Director should know how to handle subject access requests and data breaches.
🔵 Recommended
12. Legal Formalities (8 items)
Entire Agreement Clause
Agreement supersedes all prior discussions, negotiations, and arrangements. Prevents parties claiming "but you promised..." based on pre-contract conversations. Critical for legal certainty.
🔴 Critical
Governing Law and Jurisdiction
Agreement governed by England & Wales law (or Scotland/NI if applicable). Courts of England & Wales have exclusive jurisdiction for disputes. Standard for UK contracts.
🔴 Critical
Notices Provisions (How to Serve Formal Notices)
Specifies how formal notices must be given: email, recorded delivery, personal delivery, or to specified addresses. Important for termination notices, breach notifications. Without this, notices may be invalid.
🟡 Important
Severability Clause (Severing Invalid Provisions)
If any provision is held invalid/unenforceable, remainder of agreement survives. If provision would be valid if modified, courts apply minimal modification to make it valid. Prevents entire contract failing.
🟡 Important
Variation/Amendment Clause (Changes in Writing Only)
Any changes to agreement must be in writing and signed by both parties. Prevents informal variations and disputes about whether terms were changed. Essential for maintaining contractual certainty.
🟡 Important
Force Majeure Clause (Unforeseen Circumstances)
Neither party liable for failure to perform due to circumstances beyond reasonable control (pandemic, natural disaster, war, government action). Provides protection for unforeseeable events.
🔵 Recommended
Proper Signature Blocks and Execution
Agreement includes proper signature blocks with names, titles, and dates for both director and company representative. Agreement not binding until executed by both parties. Essential formality.
🔴 Critical
Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template (Recommended)
Save hours of legal research and drafting. Our professionally-crafted director service agreement covers all 56 compliance points with legally-sound wording. Available in both Interview Mode (guided) and Editor Mode (direct editing) for just £10.
📝 Draft Your Own Agreement
Use this checklist as your guide, but remember: getting the legal wording correct is complex. Director service agreements require precise language for statutory duties, fiduciary obligations, indemnity provisions, and restrictive covenants. A single error can make clauses unenforceable or leave you exposed to liability.
⚖️ Book a Legal Consultation
For complex situations, multiple directorships, or high-value appointments, consider booking a consultation with our legal professionals for personalized advice tailored to your specific circumstances and company structure.