Employment Contract – Directors

What is a Director’s Employment Contract (Service Agreement) and when should you use it?

A Director’s Service Agreement (also known as an Employment Contract) sets out various rights and obligations that arise as a result of appointing a director, who is also an employee.

It creates certainty for the director and the company, allowing both parties to be protected in situations of dispute or disagreements.

This template is for the hire of a director as an employee.

As you would expect, there is more detail within this type of contract than for someone who is not a director.

It has been drafted so that it can be used for either fixed-term or full-time employment.

If you’re hiring someone that’s not a director, take a look at our standard employment contract template instead.

Our template includes provision for remuneration and common benefits.

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 agreement is particularly strong on the protection of confidentiality and company secrets.

What else might you need?

Director’s service contracts are pretty detailed agreements.

You’ll find they contain a number of factors on which you may want to take legal advice, or get more background detail, such as whether you want to grant share options as part of the deal, how you want to handle conflicts of interest, or which restrictive covenants to include (these limitations constrain the director’s activities for a specified time frame after they may have left your business), what happens if you include a garden leave period or you want to have the option to offer the director payment instead of making them work their notice period… Holidays, sick pay, benefits and other allowances are all covered here, along with helpful guidance to assist you in making logical choices for your particular circumstances.

Along with any employment contract, at any level of the employee career scale, you should have in place an employee handbook which sets out employment policies, compliance with which is obligatory for the employee, but the detail of which is not part of the employment contract itself (allowing you to change this content without employee consent, when you need to).

These policies will cover key aspects of employment relationships, such as performance management, absence management, family-friendly working rights, bullying and harassment, drugs and alcohol usage, employee data protection and privacy matters, social media and internet usage, health and safety, misconduct, disciplinary and grievance matters.

We have templates for an employee handbook and all the core policies that your business needs.

Updated 13 January 2025