Director's Service Agreement (UK)
This Director's Service Agreement (the "Agreement") is entered into on [Effective Date] (the "Effective Date") by and between:
(1) [Company Name], a company incorporated in England and Wales with company number [Company Reg Number], whose registered office is at [Company Address], [Company City], [Company County], [Company Postcode] (the "Company"); and
(2) [Director Name], of [Director Address], [Director City], [Director County], [Director Postcode] (the "Director").
The Company and the Director are referred to collectively in this Agreement as the "Parties" and individually as a "Party".
BACKGROUND
WHEREAS, the Company wishes to appoint the Director to serve as [Director Title] of the Company on the terms and conditions set out in this Agreement; and
WHEREAS, the Director wishes to accept such appointment on those terms and conditions;
NOW, THEREFORE, in consideration of the mutual promises and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. APPOINTMENT
1.1 The Company hereby appoints the Director as [Director Title] of the Company with effect from the Effective Date, and the Director accepts such appointment, on the terms and conditions of this Agreement.
1.2 The Director's appointment is subject to the Articles of Association of the Company (the "Articles") as amended from time to time, and to the provisions of the Companies Act 2006 and all other applicable legislation.
1.3 The Director confirms that they are not prevented from holding office as a director by reason of any order under the Company Directors Disqualification Act 1986, any restriction under the Companies Act 2006, or any other legal impediment.
2. DUTIES AND POWERS
2.1 The Director shall carry out the following duties and responsibilities: [Director Duties].
2.2 The Director shall comply with the general duties of directors as set out in sections 171 to 177 of the Companies Act 2006, including but not limited to the duty to act within powers, the duty to promote the success of the Company, the duty to exercise independent judgement, the duty to exercise reasonable care, skill and diligence, the duty to avoid conflicts of interest, the duty not to accept benefits from third parties, and the duty to declare interests in proposed transactions.
2.3 The Director shall faithfully and diligently perform their duties and exercise their powers consistent with the Director's position, and shall comply with all reasonable and lawful directions given by the Board of Directors (the "Board").
2.4 The Director's principal place of work shall be [Place of Work]. The Company may require the Director to travel within the United Kingdom and internationally from time to time as the business of the Company may reasonably require.
2.5 Unless the Board otherwise agrees in writing, the Director shall devote the whole of their working time, attention, and abilities to the business of the Company and shall not, without the prior written consent of the Board, engage in any other business activity, whether paid or unpaid, which may conflict with, or detract from, the Director's duties under this Agreement.
3. TERM AND NOTICE
3.1 This Agreement shall commence on the Effective Date and shall continue on a [Appointment Type] basis unless and until terminated in accordance with the provisions of this Agreement.
3.2 Where this appointment is on a fixed term basis, it shall expire on [Fixed Term End Date] unless terminated earlier in accordance with this Agreement or renewed by mutual written agreement of the Parties.
3.3 Either Party may terminate this Agreement by giving to the other Party not less than [Notice Period] written notice, such notice to expire at any time.
3.4 This Agreement is subject to early termination in accordance with clause 13 (Termination) below.
3.5 For the avoidance of doubt, the Director's appointment as a director of the Company may be terminated by ordinary resolution of the shareholders pursuant to section 168 of the Companies Act 2006, and nothing in this Agreement shall be construed as limiting that statutory right. However, the Director shall remain entitled to any compensation or damages arising from such removal in accordance with the terms of this Agreement.
4. WORKING HOURS AND HOLIDAYS
4.1 The Director's normal working hours shall be [Working Hours]. The Director acknowledges that the nature of a directorial role requires flexibility and that they may be required to work such additional hours as are necessary for the proper performance of their duties, without additional remuneration.
4.2 The Director agrees that, given the autonomous nature of the Director's role and the ability to determine the duration of working time, the provisions of the Working Time Regulations 1998 relating to maximum weekly working time (regulation 4) do not apply to the Director's appointment under regulation 20 of those Regulations.
4.3 The Director shall be entitled to [Holiday Entitlement] paid holiday in each holiday year, in addition to which they shall not normally be required to work on English and Welsh bank holidays. The holiday year runs from 1 January to 31 December. Unused holiday entitlement may not be carried forward to the next holiday year unless approved in writing by the Board.
5. REMUNERATION
5.1 The Company shall pay the Director a gross salary of £[Base Salary] per annum, payable [Payment Frequency] in arrears by bank transfer, subject to deductions for income tax under PAYE and employee National Insurance contributions as required by HMRC.
5.2 The Director's salary shall be reviewed annually by the Board on or around [Salary Review Date], but the Company shall be under no obligation to increase the Director's salary following any such review.
6. EXPENSES
6.1 [Expenses Policy]
7. CONFIDENTIALITY
7.1 The Director acknowledges that in the course of their appointment they will have access to and be entrusted with Confidential Information. "Confidential Information" means all information relating to the business, finances, technology, clients, suppliers, or affairs of the Company or any Group Company (as defined in section 474 of the Companies Act 2006) which is not in the public domain, including but not limited to: [Confidential Information Scope].
7.2 The Director shall not at any time during the continuance of this Agreement, or at any time after its termination, use or disclose to any person any Confidential Information, except:
- in the proper performance of the Director's duties under this Agreement;
- as required by law, by any court of competent jurisdiction, by HMRC, or by any regulatory authority to which the Company is subject;
- to the Company's professional advisers who are bound by a duty of confidentiality; or
- with the prior written consent of the Board.
7.3 Nothing in this clause shall prevent the Director from making a protected disclosure within the meaning of section 43A of the Employment Rights Act 1996 (whistleblowing) or from reporting a criminal offence to any law enforcement authority.
8. TERMINATION
8.1 The Company may terminate this Agreement with immediate effect and without notice or payment in lieu of notice if the Director:
[Summary Termination Grounds].
8.2 On termination of this Agreement (howsoever arising), the Director shall:
- immediately resign from all offices held in the Company and any Group Company (as defined in section 474 of the Companies Act 2006), and from all trusteeships held by the Director on behalf of the Company, without claim for compensation;
- return to the Company all property, documents (including copies), equipment, laptops, mobile phones, keys, and any other items belonging to the Company or any Group Company that are in the Director's possession or control;
- irretrievably delete all Confidential Information stored on any personal device, computer, or cloud storage service; and
- if required by the Company, confirm in writing that they have complied with their obligations under this clause.
8.3 The Director irrevocably appoints the Company as their attorney to execute any documents and do anything necessary to give effect to the Director's obligations under clause 13.2, including the resignation from any office, where the Director has failed to do so within seven days of termination.
9. GENERAL PROVISIONS
9.1 Entire Agreement. This Agreement (together with any documents referred to herein) constitutes the entire agreement between the Parties relating to the Director's appointment and supersedes all previous agreements, arrangements, and understandings between them, whether written or oral.
9.2 Variation. No variation of this Agreement shall be effective unless made in writing and signed by both Parties.
9.3 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by any court or competent authority, the remaining provisions shall continue in full force and effect.
9.4 Waiver. No failure or delay by a Party to exercise any right or remedy under this Agreement shall be construed as a waiver of any such right or remedy.
9.5 Third Party Rights. No person who is not a party to this Agreement shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.
9.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed shall constitute a duplicate original, but all the counterparts shall together constitute one agreement.
10. GOVERNING LAW AND JURISDICTION
10.1 This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of England and Wales.
10.2 Each Party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement or its subject matter or formation.
IN WITNESS WHEREOF, the Parties have executed this Director's Service Agreement as of the Effective Date first written above.
SIGNED for and on behalf of [Company Name]
Name: [Company Signatory Name]
Title: [Company Signatory Title]
SIGNED by the Director
Name: [Director Name]
Company
________________
Signature
Date: ________________
Director
________________
Signature
Date: ________________
What Is a Director's Service Agreement (UK)?
A Director's Service Agreement in the United Kingdom sets the services to be provided, the fees, the timetable, and each side's responsibilities for the engagement, and takes its legal force from the Employment Rights Act 1996.
Directors occupy a dual legal status in English law. As officers of the company, they are subject to the general duties set out in sections 171 to 177 of the Companies Act 2006, including the duty to act within their powers, the duty to promote the success of the company for the benefit of its members, the duty to exercise independent judgement, the duty to exercise reasonable care, skill, and diligence, the duty to avoid conflicts of interest, the duty not to accept benefits from third parties, and the duty to declare interests in proposed transactions. As employees (where they perform executive functions), they are also entitled to the protections afforded by employment legislation, including the Employment Rights Act 1996, the Working Time Regulations 1998, the Equality Act 2010, and the Pensions Act 2008.
Section 227 of the Companies Act 2006 defines a director's service contract broadly to include a contract of service, a contract for services, and a letter of appointment. Under section 228, a company must keep a copy of every director's service contract (or a written memorandum of its terms if the contract is not in writing) available for inspection by the members at the registered office or a SAIL (Single Alternative Inspection Location). This template is drafted in accordance with English common law and incorporates the key statutory requirements to provide a strong and enforceable agreement.
The legal framework governing the Director's Service Agreement (UK) in United Kingdom draws on several key statutes and regulatory bodies. Under the Employment Rights Act 1996, the Employment Tribunal adjudicates workplace disputes. Section 94 of the Employment Rights Act 1996 provides the right not to be unfairly dismissed. The Advisory, Conciliation and Arbitration Service (ACAS) provides early conciliation under Section 18A of the Employment Tribunals Act 1996. The UK GDPR and Data Protection Act 2018 govern personal data handling. HM Revenue and Customs (HMRC) administers PAYE and National Insurance contributions under the Income Tax (Earnings and Pensions) Act 2003. Parties executing a Director's Service Agreement (UK) in United Kingdom should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Employment Rights Act 1996 sets the foundational requirements.
When Do You Need a Director's Service Agreement (UK)?
A Director's Service Agreement is required whenever a company registered in England and Wales appoints an executive director who will be performing services for the company in return for remuneration. While non-executive directors are typically appointed under a simpler letter of appointment, executive directors who play an active role in managing the business should have a thorough service agreement that clearly defines the terms of their engagement.
The most common circumstances requiring a Director's Service Agreement include: the appointment of a new managing director, chief executive officer, finance director, or other executive director; the conversion of an informal arrangement with a founding director into a formal contractual relationship; the recruitment of an external candidate to a senior directorial position; and the renegotiation of an existing director's terms following a change in the company's ownership, structure, or strategic direction. It is also advisable to put a formal agreement in place before any funding round or investment, as institutional investors and venture capital firms typically require all directors to have documented service agreements.
Section 188 of the Companies Act 2006 imposes a specific requirement for director's service contracts with a guaranteed term exceeding two years. Such contracts must be approved by an ordinary resolution of the shareholders before they are entered into, and a memorandum setting out the proposed contract must be made available for inspection by the members. If a contract is agreed in contravention of section 188, the provision is void to the extent of the contravention, and the company is deemed to be able to terminate the contract at any time on reasonable notice (section 189). This makes it essential to address the question of shareholder approval when drafting a director's service agreement with a term of more than two years.
Parties in United Kingdom should prepare a Director's Service Agreement (UK) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Employment Rights Act 1996, the Employment Tribunal adjudicates workplace disputes. Section 94 of the Employment Rights Act 1996 provides the right not to be unfairly dismissed. The Advisory, Conciliation and Arbitration Service (ACAS) provides early conciliation under Section 18A of the Employment Tribunals Act 1996. The UK GDPR and Data Protection Act 2018 govern personal data handling. HM Revenue and Customs (HMRC) administers PAYE and National Insurance contributions under the Income Tax (Earnings and Pensions) Act 2003. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Director's Service Agreement (UK)
A well-drafted Director's Service Agreement for use in England and Wales should contain several key provisions that reflect the unique legal position of company directors under English law.
The appointment clause should specify the director's title, commencement date, and reporting lines, and should confirm that the appointment is subject to the Articles of Association and the Companies Act 2006. It should also include a warranty that the director is not disqualified from acting as a director under the Company Directors Disqualification Act 1986.
The duties clause should describe the director's principal responsibilities and expressly reference the statutory duties under sections 171 to 177 of the Companies Act 2006. It should also address the director's obligation to devote their full working time to the company and to obtain prior consent before engaging in any outside business activity.
The remuneration and benefits clauses should set out the director's salary, bonus arrangements (if any), pension contributions (in compliance with auto-enrolment under the Pensions Act 2008), and any benefits in kind such as a company car or private healthcare. All benefits in kind must be reported to HMRC on form P11D, and the agreement should acknowledge this.
The confidentiality clause should define the scope of confidential information and set out the director's obligations both during and after their appointment. It should include a carve-out for protected disclosures under section 43A of the Employment Rights Act 1996 (whistleblowing).
The intellectual property clause should assign all IP created during the course of the director's duties to the company, consistent with sections 39-43 of the Patents Act 1977 and the Copyright, Designs and Patents Act 1988, and should include a waiver of moral rights.
Restrictive covenants (non-compete, non-solicitation, and non-poaching) must be carefully drafted to be reasonable in scope, duration, and geographical area. Following Tillman v Egon Zehnder Ltd [2019] UKSC 32, courts may sever unenforceable provisions rather than void the entire covenant. A garden leave clause supports enforceability by providing a cooling-off period during the notice period. The governing law clause should specify the laws of England and Wales and the exclusive jurisdiction of the courts of England and Wales.
Additional compliance elements for a Director's Service Agreement (UK) used in United Kingdom include: Under the Employment Rights Act 1996, the Employment Tribunal adjudicates workplace disputes. Section 94 of the Employment Rights Act 1996 provides the right not to be unfairly dismissed. The Advisory, Conciliation and Arbitration Service (ACAS) provides early conciliation under Section 18A of the Employment Tribunals Act 1996. The UK GDPR and Data Protection Act 2018 govern personal data handling. HM Revenue and Customs (HMRC) administers PAYE and National Insurance contributions under the Income Tax (Earnings and Pensions) Act 2003. Forms-legal.com provides this template as a starting point for United Kingdom-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Director's Service Agreement (UK) (United Kingdom) [Legal document template]. Forms Legal. https://forms-legal.com/uk/employment/contracts/directors-service-agreement-uk
"Director's Service Agreement (UK) (United Kingdom)." Forms Legal, 2026, https://forms-legal.com/uk/employment/contracts/directors-service-agreement-uk.
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title = {Director's Service Agreement (UK) (United Kingdom)},
year = {2026},
howpublished = {\url{https://forms-legal.com/uk/employment/contracts/directors-service-agreement-uk}},
note = {Free legal document template. Based on Employment Rights Act 1996}
}Also available for these jurisdictions:
Frequently Asked Questions
A director's service agreement is a specific type of contract that governs the terms of a director's appointment to the board of a company. While it shares many features with a standard employment contract (salary, notice periods, holiday entitlement), it also addresses matters unique to company directors, such as statutory duties under sections 171-177 of the Companies Act 2006, fiduciary obligations, the power of shareholders to remove a director under section 168, garden leave, and compliance with section 188 regarding long-term service contracts. Unlike a standard employee, a director holds a dual status as both an officer of the company and (where they perform executive functions) an employee, meaning they are subject to both company law and employment law. HMRC treats directors as employees for PAYE and National Insurance purposes regardless of their contractual status.
Yes, if the guaranteed term of the service contract exceeds two years. Section 188 of the Companies Act 2006 provides that a company may not agree to a provision under which the guaranteed term of a director's employment is, or may be, longer than two years unless that provision is approved by an ordinary resolution of the members (shareholders). Before the resolution is passed, a memorandum setting out the proposed contract must be made available to the members for inspection at the company's registered office for not less than 15 days before the meeting, and at the meeting itself. If a provision is agreed in contravention of section 188, the provision is void to the extent of the contravention, and the contract is deemed to contain a term entitling the company to terminate it at any time by giving reasonable notice (section 189).
Restrictive covenants are enforceable under English law, but only if they are reasonable and go no further than is necessary to protect the company's legitimate business interests. The main types of post-termination restriction are non-competition, non-solicitation of clients, non-dealing with clients, and non-poaching of employees. English courts apply a doctrine of restraint of trade and will consider the scope (what activities are restricted), duration (how long the restriction lasts), and geographical extent (where the restriction applies). For directors, courts are generally more willing to uphold longer restriction periods (typically 6-12 months) because directors have greater access to confidential information and client relationships. The leading case is Tillman v Egon Zehnder Ltd [2019] UKSC 32, in which the Supreme Court confirmed that courts may sever an unenforceable part of a restrictive covenant and enforce the remainder.
Under section 168 of the Companies Act 2006, a company may by ordinary resolution (a simple majority of votes cast) remove a director before the expiration of their period of office, notwithstanding anything in the company's articles or in any agreement between the company and the director. However, this does not deprive the director of any right to claim compensation or damages for loss of office. If the director has a fixed-term service agreement that has not expired, the company may be liable to pay damages for wrongful dismissal (breach of contract). The director may also have claims for unfair dismissal under the Employment Rights Act 1996 if they have the requisite qualifying service. Special notice of 28 days is required for such a resolution (section 168(2)), and the director has the right to make representations to the shareholders before the vote.
Yes, a garden leave clause is enforceable under English law provided it is expressly set out in the director's service agreement. During a period of garden leave, the director remains employed and continues to receive their salary and benefits, but is not required to attend the workplace or perform duties. The enforceability of garden leave was confirmed in William Hill Organisation Ltd v Tucker [1999] ICR 291, where the Court of Appeal held that an employer cannot unilaterally place an employee on garden leave without an express contractual right to do so. An express garden leave clause also supports the enforceability of post-termination restrictive covenants, because the courts may take the period of garden leave into account when assessing whether the overall period of restriction is reasonable.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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