Our directors' service contracts are sharp and clear. For the executive director involved in the day to day management of the company, employment terms have been combined with provisions that provide additional protection for the company required for someone at the most senior level of the management structure. Our set also includes more traditional service agreements for self-employed, non-executive directors and for an unpaid 'non-exec', as may be needed by a charity.
Directors' service contracts
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This directors service agreement is a complete legal and practical framework for the employment of any executive director, whether on a running contract or on a fixed term. Provision for remuneration and common benefits is included, as is strong protection of company information.
This non-executive director's service agreement is a contract for services of a self-employed, part-time director. It makes clear no contract of employment. It can be used for a fixed term or a running contract for a company director, or director-level equivalent in a charity or other organisation. It provides particularly strong protection of company information.
This non-executive director's service agreement is a contract for services for an unpaid, part-time director. It makes clear no contract of employment. It can be used for a fixed term or a running contract for a company director, or director-level equivalent in a charity or other organisation. It provides particularly strong protection of company information.
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Clarity about the nature of the contractual relationship
An executive director used to have a “service agreement”. Today a company is under a statutory obligation to provide written terms of employment, just as it is to any other employee, and even if the director is the sole owner of the company.
A non-executive director is not an employee of the organisation, and therefore requires a contract that preserves his or her self-employed status and clarifies that the work he or she performs is in the nature of consultancy rather than executive employment.
Accordingly, the greatest differences between our directors’ service contracts relate not to what position the director holds, or what he or she does, but to his or her contractual relationship with the company.
All these agreements are therefore suitable:
- for use by any type of organisation: company, charity, trust, partnership, governmental organisation or other
- for use with directors holding any position within the organisation
- for permanent and fixed terms of appointment
What these agreements cover
In addition to the terms that set out the relationship of employment or self-employment, there are many other matters that should be agreed in a contract.
- are up to date with current applicable employment law
- protect the director from unreasonable demands by other directors and shareholders
- set out remuneration and benefits
- cover what happens at termination, and in case of redundancy
- include strong protection for the organisation’s intellectual property
- minimise the administrative burden of legal compliance
Some of the provisions are required to comply with the law. Others are practical. The explanatory notes, which come with these documents, will guide you as to the importance of specific issues.
These contracts provide a balance between protection for the company and for the director. If there is a difference in interests, we favour the company.
I am guilty of not reading the document through before starting to modify it, so I didn't realize there were explanatory notes at the end until I actually got there, so maybe a note to flag that there is more information available later would be helpful for users like me.