Director Service Contract

Technically speaking, each director of a limited company is deemed to be within the employ of the company. It is therefore important to have a contract of employment in place, both to protect the company and the directors at the same time.

The Directors Service Contract (also known as a Director Service Agreement) is the most common way in which this is implemented. Due to the nature of business and the legal requirements placed on such a contract, they are usually lengthy and full of various terms and conditions.

Legal Requirements – Directors Service Contract

The legal precedent set by the Employment Rights Act 1996 means that there is a requirement placed on companies to provide both directors and employees alike with a contract of employment within a month of them taking the position.

In relation to Director Service Contracts, Chapter 5, Section 227 of The Companies Act 2006 states that the contract should cover the services that the Director is expected to carry out on behalf of the company, among other things.

It is also stated that, just like the register of directors, the Directors Service Contract should be available for inspection at the Companies registered office. Along similar lines, Section 188 of the Companies Act 2006 states that Directors Service Contracts older than 2 years (or for periods of longer than 2 years) must be approved by the members (shareholders).

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You can see that the drafting of a Director Service Contract is a complex thing. Standard employment contracts are complicated enough but because of the nature of Directors and their relationship to the company (including their position of responsibility), their contract is necessarily more detailed and encompassing.

Recognising the difficulty for newly formed companies, expert legal team at The Company Warehouse have drafted a set of Director Service Contracts which we are happy to offer to newly formed companies or anyone else that needs them. The price includes a template in the Microsoft Word format with attached notes and guidance.

Please note, we cannot guarantee that this template will cover every eventuality. For general running of a company it is the perfect tool, however if you require more comprehensive terms for any specific reason, then we recommend that you seek legal advice. Most of our clients will find that this template of Directors Service Contract will meet their needs.

You will benefit from our experience and research, knowing what is required by the law and covering each area necessary for the correct functioning of a director and the company. Using our template will save you the time and effort you would need to put in to drafting your own and allow you to get on with the important business of running your new company.

The template version of the Director Service Contract includes sections covering:

• Directors Appointment
• The Term of Employment
• Directors Duty and Responsibilities
• Pay, expenses, holiday entitlement
• Intellectual Property
• Termination of Employment
• Reconstruction and Amalgamation
• And More!

All for a low cost of £40 ex.Vat.